New York Attorney General Eric T. Schneiderman announced Monday that his office has settled with five companies that were collecting on payday loans from New Yorkers.
Four collection agencies and one debt buyer were involved in the action.
Payday loans violate New York’s usury and licensed lender laws. Typically, payday loans have annual rates of interest from 100 percent to 650 percent or more. These interest rates far exceed the maximum rate allowed under New York law, which is limited to 16 percent for most lenders not licensed by the state.
“Payday loans trap thousands of New Yorkers in a cycle of debt and prey on vulnerable consumers, all for the financial benefit of debt collectors. Unfortunately for those companies, payday loans are also illegal, and my office will continue to crack down on an industry that exploits desperate consumers across our state,” said Attorney General Schneiderman. “These agreements are one more step in our continuing fight to protect New Yorkers from a range of unfair financial schemes – from predatory loans, to illegal foreclosures and other abuses by big financial institutions.”
The companies involved in the settlement are V&R Recovery, Inc. (DBA Alexander & Stefano), RJA Capital, Inc., Westwood Asset Management, LLC, Erie Mitigation Group, LLC, and Northern Resolution Group, LLC. All are located in the Buffalo area.
The five companies involved in the settlement will pay a total of $279,605.98 in restitution and $29,605.98 in penalties. In addition, one debt-buying company was required to reverse 8,550 negative credit reports it had made to credit reporting bureaus on New Yorkers, and is prohibited from collecting on $3,200,000 in payday loans taken out by New Yorkers. All of the companies will be prohibited from collecting on payday loans from New Yorkers in the future.