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No, payday lenders are not the motor vehicle department, nor are they law enforcement. If they're telling you they can do this, they're breaking the law. Research the Fair Debt Collection Practices Act (FDCPA). You can find it online. It will tell you what collectors can and cannot do. At most, they could sue you civilly for default, that's it.

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Q: Can a payday loan company put a block on your drivers license?
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