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The Federal Trade Commission recently filed a complaint against Payday Support Center, LLC, now known as PSC Administrative, LLC, and others,  claiming that the defendants targeted consumers who already owe payday loans by using marketing tools, such as the Internet, radio, and telemarketing.  The FTC has charged the defendants with violating the Fair Debt Collection Practices Act, which prohibits deceptive acts and practices and the Commission’s  Telemarketing Sales Rule, which prohibits abusive and deceptive telemarketing practices.

Payday loans, also called payday advances, salary loans, payroll loans, or cash advance loans are low amount, high interest rate, short-term unsecured loans.  Repayment of a payday loan does not have to be linked to a borrower’s future paychecks.  Payday loans are marketed as a quick solution to cash flow problems.

According to the Federal Trade Commission (FTC)  people struggling to pay off payday loans are targeted by companies claiming to be able to negotiate with lenders to lower payments, eliminate debt or lower an interest rate.  The FTC claims these companies provide little or no debt relief services for their clients, and their actions do not generally eliminate or even reduce most clients’ payday loans.

The goal of the FTC is to permanently stop the defendants’ allegedly illegal conduct, as well as obtain monetary judgment for refunds to defrauded consumers.

While payday loans are not technically illegal in Massachusetts, there are loan amount, interest rate and licensing regulations that make it difficult for companies to market them in Massachusetts.  The Massachusetts Division of Banks has an informative page about payday loans and the extreme caution that should be exercised in considering these products.

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