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New Federal Court choice relates the “ True Lender ” Doctrine to Internet-Based Payday Lender

New Federal Court choice relates the “ True Lender ” Doctrine to Internet-Based Payday Lender

District Court for the Eastern District of Pennsylvania has highlighted once more the regulatory dangers that the alleged “true lender” doctrine can make for internet-based loan providers whom partner with banking institutions to ascertain exemptions from relevant state customer protection laws and regulations (including usury regulations). Even though the Court would not achieve a concluding decision on the merits, it declined to simply accept federal preemption as grounds to dismiss an enforcement action brought by the Commonwealth of Pennsylvania against an internet-based payday loan provider whom arranged for the state-chartered bank to invest in loans at interest levels surpassing the Pennsylvania usury limit. (more…)