Internet payday lenders targeted
November 8, 2006 - Charleston, South Carolina
Jeannette Hartman of Clarksburg is a consumer who got caught up in payday lending. In her case, it was with lenders who operate on the Internet.
Hartman said several years ago she had a baby and was off work for six weeks without pay. "A girlfriend mentioned a payday loan," she said. "It was very easy and accessible. There was a whole list of companies on the Internet."
Payday lenders exchange cash for a postdated check and charge a fee. Payday lenders have come under heavy fire from consumer advocates who contend the lenders charge exorbitant interest rates. The critics say consumers who can't pay off loans roll them over and just go further into debt.
Hartman said it was easy to get caught up in payday lending online.
"You just put down how much you make and it lists the states they do business in," she said. "West Virginia was listed on all of the (sites) I ever went to. They approved you within minutes. You sent them your account information and they wired the money into your account.
"It was easy to try to get extra money for Christmas, for when I just wanted something," Hartman said. "Then I paid the price when I had to pay them back."
Hartman said that if she could not pay the full loan back, she could make a payment and pay a fee and renew the loan, then do it again and again.
"They sucked you into thinking it was easy money," she said. "It was like an addiction. It seemed like a solution but it was really doing more harm. At one point I had three loans out and they took a payment out of my account that was my full paycheck. This was a nightmare. If I totaled up all of the money I wasted, it would be scary."
West Virginia Attorney General Darrell McGraw announced Monday that his office has reached settlements with 18 Internet-based payday lenders in which the lenders agreed to quit doing business in the state. He said 10 of them have refunded $37,498 in unlawful fees paid by 83 consumers.
Assistant Attorney General Norman Googel estimated that the other eight firms will probably owe $6,000 to $11,000 each and that settlements with them will impact more than 300 additional consumers.
McGraw also said that he has sued 14 other Internet-based payday lenders, asking Kanawha Circuit Court to order them to stop doing business in West Virginia until the lawsuit is decided.
The lenders are engaging in unlawful lending activities in West Virginia by using Internet Web sites to make payday loans that require payment of interest with annual percentage rates ranging from 312 percent to 3,650 percent, even though the maximum annual percentage rate allowed for consumer loans in West Virginia is 18 percent, McGraw charged.
The Internet payday lenders are subject to the provisions of the West Virginia Consumer Credit and Protection Act and the state has jurisdiction over their conduct in West Virginia, McGraw claimed. The companies make consumer loans and are debt collectors as defined by state law and that they are required to obtain a state business license before conducting business in West Virginia, he claimed.
The lenders he has sued are not licensed to make loans in West Virginia and have challenged the state's authority to regulate their lending activities and have refused to comply with his investigative subpoenas, McGraw said.
McGraw announced one year ago that he was gearing up for a major battle against online payday lenders.
"Today we have sent a message that loans made to West Virginia consumers over the Internet must comply with our laws," McGraw said Monday in a prepared statement. "We will take whatever legal action is necessary to protect our consumers from Internet predators."
Googel said, "We definitely don't have it cleaned up. We hope that what we've done today is going to get the attention of consumers who get payday loans -- that they will file complaints with our office. Every time we get a complaint about a payday lender, we open an investigation."
All of the lenders McGraw reached settlements with or sued have no bricks-and-mortar presence in West Virginia.
The only payday lender who has had physical offices in West Virginia in recent years was First American Cash Advance. The company pulled out of the state this summer following a crackdown on payday lending by a federal bank regulator, the Federal Deposit Insurance Corp.
McGraw said the Internet payday lenders that have agreed to quit doing business in the state and pay refunds and cancelled debts to consumers are: AnyDay Cash.com, Holiday, Utah; Checkexpress.com, doing business as Paydayloantoday.com, Las Vegas, Nev.; CNC Funding, Euless, Texas; Elite Cash Advance, Salt Lake City, Utah; FSM Processing Inc., Las Vegas, Nev.; Get Cash 911.com, San Diego, Calif.; PayDay Advance Plus Inc., Los Angeles, Calif.; Sordi Inc., doing business as Checks for Cash, Rockford, Ill.; Star Light Financial, Del Ray Beach, Fla.; and VIP Cash, Las Vegas, Nev.
Googel said eight other companies have confirmed that they have accepted the terms of a settlement but "we don't feel we can name them yet" because they have not signed the agreements.
Sued by McGraw were Apple Fast Cash Personal Loans, Wilmington, Del., J. David Blevins, vice president; Cash Advance Network Inc., Carson City, Nev., John Fontano, officer of the company; Cash Advance USA, Miami, Fla., Caroline Bishop, collections manager; Internet Cash Advance Marketing Inc., doing business as Cash Back Values, Carson City, Nev., no owner identified; Cash Net, Salt Lake City, Utah, Jules Shore, officer of the company; American Interweb Marketing, doing business as CASHRebateOnLine.com, Carson City, Nev., Randy Stevens, officer of the company; Leads Global Inc., doing business as Cash Today Limited and Cash2day4you.com, Reno, Nev., Angela Klein , officer of the company.
Also: GECC, doing business as Cashdirectnow.com, Rapid City, S.D., Chad Willard, officer of the company; Americash Hotline LLC, doing business as Direct Cash Express LLC, Wilmington, Del.; no owner identified; Magnum Cash Advance Inc., Wilmington, Del., Norman Faye, officer of the company; Ambassador Financial Services, doing business as Nationwide Cash, Espanola, Minn.; no owner identified; PayDay OK, doing business as PayDay Select, Ruidiso, N.M., Jason Harvison, officer of the company; Quick Payday.com Financial Solutions, Logan, Utah, Richard and Emily Dunkley, officers of the company; and USA Cash Center, Rapid City, S.D., Jack Sisk, officer of the company.
Charleston Daily Mail, George Hohmann, Daily Mail Business Editor
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