Unsolicited, Live Check-Credit

The Washington Post has an interesting story about consumer installment lender Mariner Finance.  Three brief observations. First, Mariner has found an interesting regulatory loophole.  The Truth in Lending Act prohibits the issuance of "live," unsolicited credit cards.  That provision, however, only applies to devices that can be used for multiple extensions of credit, not single use items like a check. So Mariner can mail out live checks to consumers (it presumably prescreens a population to target), without running afoul of the federal prohibition on mailing live, unsolicited credit cards.  That's a  creative way of reaching customers without having an extensive and expensive brick-and-mortar presence.  It also avoids some of the adverse selection problems of internet-based lending. Second, there is no federal preemption obstacle to states prohibiting the issuance of live, unsolicited checks used to create a credit balance.…

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