TRACKING DOWN LENDERS: IT MAY BE HARDER THAN YOU THINK

The Internet has made it possible for payday lenders to do business from almost anywhere -- and many have chosen to do so off-shore. Besides making it harder for consumers to find them, it's provided lenders the chance to claim they're making loans under foreign laws (or from states with less consumer protection).

Thus, even though lenders are subject to the laws of the state where you applied for the loan, regulators have a tougher time enforcing these laws. If you do have a complaint, file it not only with the state regulator, but also with the Federal Trade Commission. At least that way you'll subject the lender to a wider "net" of credit-law enforcement.

ELECTRONIC PAYMENT OF PAYDAY LOANS: KNOW YOUR RIGHTS

--You have the right as a borrower to stop a lender from electronically transferring money out of your bank account.

Keep in mind this does not settle the debt but will at least stop the drain of of bounced check fees and other charges while your work out payment arrangements.

--You have the right to refuse electronic payment of loan with built-in renewals.

Thanks to the Electronic Fund Transfer Act (EFTA at 15 U.S.C. 1693a(9)) if your online payday loan has built-in renewals, the lender cannot require you to pay electronically. You have the right to block all future withdrawals by a lender, but keep in mind you are subject to bank stop-payment charges. Notify your bank at least three business days before the withdrawal is scheduled; if you do so orally, remember that any stop-payment order expires after 14 days.

Note: the good news is, notifying your bank that your debit authorization is void means the bank must block the next withdrawal as well as all future withdrawals. The bad news is, you still owe the money; again, blocking actions do not change the terms of the orginal loans.

Protect yourself: write a letter to the payday lender that it is no longer authorized to debit your account, then make a copy of your letter to give to your bank. It's the best way to ensure your bank doesn't honor subequent debits to the account. And always check your bank statements to keep track of any unauthorized withdrawals from your account.

--You have the right, in the case of one-time payment loans, to have the payday lender recognize your right to revoke authorization to debit a bank account.

Industry rules require the payday lender to disclose that the consumer may revoke authorization to debit a bank account. Plus, the lender must tell you how to revoke authorization. Refer to the fine print of the loan agreement for instructions on where and how to stop electronic access to your account. Notify your lender and your bank at least three days before the withdrawal is to take place (the due date on the loan.)

Always secure a copy of the loan document. In the case of online lenders, be sure that lender posts contact information before entering into a loan agreement -- you may need it later. Especially as industry rules require you to contact the lender that you are revoking your authorization and to then notify your bank. Internet payday loan contracts typically require you to give three days' advance notice before the payment is due if you want to revoke electronic authorization.

Note: Federal law does not give consumers the right to stop payment on a one-time debit transaction; nevertheless, the lender must comply with rules issued by a private organization that provide this right.

KNOW HOW THE SYSTEM WORKS TO PROTECT YOURSELF BEST

Even if you've done all the paperwork and filed it correctly, stopping a payday lender from withdrawing funds can still be tricky. Many banks stop-payment systems work by identifying specific dollar amounts, not the name of the payee -- so if the payee breaks payment into more than one withdrawal, payment may not be stopped! Plus, if you have other pre-set debits for a certain amount, your bank may accidentally block a debit you didn't want to make.

By learning how the banking system works, you can work with your bank to protect yourself from unwarranted withdrawals from your account. For more information, contact your banker and state regulator.

One final note: this information is provided for consumer education. It is not to be considered legal advice.