Since the online cash advance industry has seen an explosion of lenders in the last several years, the nature of humanity has also brought a rise in scam artists and those who take advantage of borrowers in a needy situation by attempting to make them pay very high fees for loans or holding them to otherwise unreasonable terms or expectations. In order to avoid more serious problems and limit the number of opportunities to take advantage of consumers, Congress has acted in the last decade to write and enforce new laws that regulate the payday loan industry.
One of the first things that Congress did was to try to get the states to pass limits and restrictions on how much could be charged by any single lender for a payday loan. These caps, both in regular loans and the online loans were designed to protect consumers but there was a backlash against the states as the lenders threatened to leave and take their business to those states who refused to put a cap on loans. Eventually, however, a general agreement was reached and some caps were put in place that were agreeable and reasonable to both sides. How much money you are allowed to borrow at the maximum is often controlled by individual state laws.
The first loans offered by lenders were often extremely-high interest loans that had a tendency to change on occasion based on how the borrower managed the loan or their timing for repaying the loan. One of the first things that the states did when regulation was pushed down from Congress was to eliminate the ability for a lender to change the loans on the fly. Now an online cash advance or other payday loan has to have its terms spelled out in certain, clear, unchangeable terms before the loan paperwork is signed and agreed to.
Not surprisingly, another reform that was put into place was to add uniformity to the practice of offering the online cash advance or payday loan. Rather than running across various terms, conditions, different sized fonts, legal documents and fine print, regulation was put into place to ensure a consistency when it came to contracts. Now all payday loan terms must be spelled out clearly and precisely on the website with the fees for taking out a loan available in bold print so that it is easy to find.