A federal regulator has clamped straight straight down for a bank that aided Ohio payday lender CheckSmart problem loans on prepaid cards.

Customer teams challenged Urban Trust Bank’s relationship with CheckSmart in might, contending the partnership could help CheckSmart dodge state lending that is payday.

The ensuing controversy triggered CheckSmart to yank their planned initial public inventory providing.

The Office of the Comptroller of the Currency said it “found violations of law and regulations” and “unsound banking practices” when it examined Florida-based Urban Trust’s relationships with outside companies including CheckSmart in a formal agreement announced Friday.

The regulator did put the bank on a tighter leash while the OCC didn’t order Urban Trust to sever its relationship with CheckSmart.

Beneath the contract, Urban Trust must assess the potential risks its understanding cards that are prepaid towards the protection and soundness associated with the bank, produce a company arrange for brand brand new and existing merchandise and make certain those goods do not break customer regulations. The lender needs to found their research to your OCC in a number of states within the next months that are few.

CheckSmart stated in a filing utilizing the Securities and trade payment that people in Ohio and Arizona may have pay day loans given right on prepaid cards. The cards bring costs for deals like checking card balances, shopping and ATM withdrawals. Understanding cards let customers to pay significantly more than the total amount packed regarding the card, an element the buyer teams contended functionality like an online payday loan by permitting customers to borrow secured on their pay- that are next pros checks. Read more