State to regulate payday loans made via Internet
The Minnesota Department of Commerce announced it is now requiring all payday lenders making small denomination, short-term loans to Minnesota residents via the internet be licensed pursuant to Minnesota law.
Licensing is required regardless of whether the lender has a physical presence in Minnesota. Payday lenders will also be required to comply with the limits on loan amounts, fees and charges, and other requirements of state law.
After further review of Minnesota law and statute the Department is now of the opinion that a payday loan made via the internet is made in the state where the borrower resides and the payday lender making such a loan is subject to Minnesota laws and licensure. As a result, all payday lenders making loans to Minnesota residents via the Internet must meet the new licensing requirements effective Dec. 1.
Financial institutions, including state or federally chartered banks or savings associations, industrial loan and thrift companies licensed under Chapter 53, regulated lenders licensed under Chapter 56, or any operating subsidiary of a financial institution, are not subject to the licensing requirements of Section 47.60, the Consumer Small Loan statute.
As an alternative, a payday lender may apply for an industrial loan and thrift company license under Chapter 53 of the Minnesota Statutes; however, the Chapter 53 license requires a physical presence in Minnesota.
Additional information concerning Section 47.60 licensing requirements and applications is available on the Department's Web page at www.commerce.state.mn.us under "consumer small loans." Additional information concerning various Minnesota statutes is available at www.leg.state.mn.us/leg/statutes.htm.
The Division of Financial Examination of the Minnesota Department of Commerce is responsible for the regulation of state chartered banks and credit unions, mortgage companies, premium finance companies, accelerated mortgage payment companies, motor vehicle finance companies, consumer small loan companies and regulated loan companies, currency exchanges, money transmitters, automatic teller machines, and electronic funds transfer. The Division is also responsible for the licensing and financial regulation of insurance companies operating in Minnesota.