What are the consequences for breaking the law?
Any credit agreement subject to the regulation that does not comply with this regulation is void from the start. The rule goes further by saying that a creditor that knowingly violates the regulation will be subject to criminal penalties. Our hope is that creditors will be very hesitant to offer payday loans, vehicle title loans and refund anticipation loans to covered borrowers. Because of the heavy penalties associated with noncompliance, the regulation allows the creditor to use a declaration signed by the borrower to determine whether the borrower is covered by the rules or not. It is very important that borrowers remember they must be truthful in signing this declaration since it is a criminal offense to lie on a credit application. The regulation also allows the creditor to check on the status of an individual if the creditor has some concern about the truthfulness of the borrower. We understand that some desperate borrowers may believe they have no other choice but to obtain a p
