The Division of Banks has issued cease and desist orders to 95 out-of-state companies marketing illegal payday loans to Massachusetts consumers.

Payday lending is not specifically prohibited in Massachusetts. However, statutory licensing provisions require entities that wish to engage in such small-dollar lending in Massachusetts obtain a small-loan license from the Division of Banks. Under the small-loan licensing requirements of Chapter 140, Section 96, an entity engaging in small loans for amounts of $6,000 or less cannot charge an annual percentage rate of more than 23 percent or fees greater than $20.

Many of the entities identified by the Division of Banks engaging in payday lending were found to be charging annual percentage rates averaging over 500 percent and fees averaging $40 to $60.

"These companies are not licensed to operate as lenders in Massachusetts and offer terms well in excess of those allowed under our small-loan statute," said . "The Division of Banks will continue to aggressively identify and pursue these types of unlicensed lenders and educate consumers of the dangers of these types of loan products."