Payday lender QC Financial Services faces class-action lawsuit
November 10, 2006 - Kansas City, Missouri
A class-action lawsuit alleges that payday lender QC Financial Services Inc. of Overland Park violated Missouri law by engaging in predatory practices such as renewing loans multiple times. The lawsuit, filed last month in St. Louis County Circuit Court, was brought by Dequae Woods, a single mother of two who makes $844 every two weeks as a doctor's medical assistant. Beginning in October 2004, Woods says, she took out three payday loans from QC, otherwise known as Quick Cash. Woods alleges that QC violated Missouri's Merchandising Practices Act by: + Renewing the loans more than six times at an interest rate of 469 percent. + Failing to evaluate her ability to repay. + Charging more than 75 percent of the principal in interest and fees. + Failing to reduce the principal by at least 5 percent when it renewed the loans. The lawsuit seeks class-action status on behalf of Missourians who borrowed money from QC and were allegedly victimized in the same way. "Though they might seem like a good idea to someone in a financial pinch, in reality they throw borrowers into an unending spiral of debt," Eric Vieth, one of Woods' attorneys, said in an e-mail message. Tom Linafelt, a spokesman for QC, said the company believed the complaint was without merit. QC complies with Missouri and federal lending laws, he said, "and remarkably few customers complain about our operations." QC is owned by QC Holdings, a company with 564 branches across the country. The company offers small, short-term loans made at high interest rates. Typically, a borrower writes a personal check to the lender for the amount borrowed plus a fee. The borrower gets the amount of the check minus the fee. The lender holds on to the check until the borrower's next payday, usually no more than two weeks. If the borrower extends or rolls over the loan, additional fees are charged. Payday loan laws, while varying from state to state, typically limit fees to between $15 and $20 per $100 borrowed. In her lawsuit, Woods alleges that she took out three loans -- one for $450, one for $300 and one for $250 -- and ended up paying nearly $1,800 in interest and fees. "In this class action, we have alleged that Quick Cash flagrantly violated Missouri laws and needlessly drove Missouri consumers into debt," Vieth said.
News Source
Kansas City Star, Dan Margolies, Staff Writer
QC Holdings, Inc. (NASDAQ: QCCO)
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