Payday loan companies charge clients an exceedingly high rate of interest — in some cases, more than 400 percent per year. This interest is often incurred in the form of fees assessed on late payments. If the fees were assessed in a way that was in keeping with the loan contract, the borrower must pay them. However, all payday loan companies must abide by certain laws; they can't take money out of a bank account without a borrower's permission.
Payday Loan Contracts
Under U.S. law, a party can extract money out of another person's account only with explicit legal permission to do so, either granted by the accountholder himself or by a judge. Even if an individual owes money to another person, the person can't attempt to collect on the debt by seizing funds from the other party's account. A payday loan company can only take money out of a person's account if the person has signed a document giving it permission to do so.
Reporting to the Payday Loan Company
If a payday loan company has taken money out of your account without your permission, contact the payday loan company. Explain to the company that you didn't give it permission to extract the funds; request that the money be returned. You may also wish to place this request in writing and send it to the company. For legal reasons, keep a copy of the letter in your files.
Reporting to the Bank
After notifying the payday loan company, notify your bank that the money was taken out of your account without your permission. The bank may contact the payday lender and ask for documentation that you allowed it to withdraw the money. The bank usually credits your account. However, the payday lender may claim that the withdrawal was performed with your permission. At this point, you should contact the appropriate legal authorities.
Reporting to the Authorities
Withdrawing money from your account without your permission is a form of theft. However, you may be best off contacting your state's consumer protection agency or attorney general rather than your local police department. The state agency will likely ask you for a description of the problem and may contact the lender on your behalf. You may also wish to consider contacting the Federal Trade Commission or an attorney with experience in contract law.