Based on the results of a survey it recently conducted, the Consumer Federation of America (CFA) warns that online payday lending sites can be a risky choice for consumers seeking small loans. Such sites collect loan applications online, and borrowers send necessary paperwork—like checks and bank statements—via fax. Loans are deposited automatically into a borrower's checking account, and payments are automatically deducted from the account on the borrower's next payday. In the case of insufficient funds, the borrower incurs fees from the payday lender and the bank.
To read the full survey results, visit www.consumerfed.org/pdfs/Internet_Payday_Lending113004.PDF.