West Virginia Attorney General Darrell McGraw Sues 12 Internet Payday Lenders and Collection Agencies
Today Attorney General Darrell McGraw continued his effort to curb illegal activities of payday lenders by filing two lawsuits against 12 Internet payday lenders and their collection agencies. Both suits ask the court to order compliance with McGraw’s investigative subpoenas and to enjoin the companies from the continued making or collection of payday loans in West Virginia.
Payday loans, which have never been legal in West Virginia, are short term loans or cash advances, typically for 14 days, secured by a post-dated check or, when offered over the Internet, secured by an agreement authorizing an electronic debit for the full loan amount plus interest from the consumer’s account.
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Internet payday loans are electronically deposited into consumers’ accounts and typically require payment of interest with annual percentage rates ("APR") ranging from 600 to 800 APR, more than 45 times greater than the maximum allowable rate (18% APR) for such loans in West Virginia. "Internet payday loan providers are the loan sharks of today," explained McGraw.
Internet payday loans are the industry’s most recent attempt to skirt consumer protection laws. The payday lending industry has historically sought to evade state usury laws (laws that cap interest rates) through a number of ruses, such as partnering with national and state-chartered banks and by offering the loans over the Internet.
McGraw’s office commenced its investigation of the Internet payday lending industry in earnest in 2005. As of this date McGraw’s office has successfully concluded 75 investigations of Internet payday lenders and their collection agencies, which have netted a total of $1,784,772.82 in cash refunds and cancelled debts for 6,612 West Virginia consumers.
The companies named in today’s filings include the following:
Suit Against Internet Payday Lenders
- Cash Advance Now d/b/a PeoplesPayday.com of Miami, FL
- Debt Doctor, LLC d/b/a Magnum Z, LLC of Wentzville, MO
- Direct ROI d/b/a Cashwest Payday Loans of Mesa, AZ
- E Smart Credit Network d/b/a www.YourLoanServices.com of Miami, FL
- Island Payday, LLC d/b/a www.islandpayday.com of Ogden, UT
- Platinum Finance Company, LLC d/b/a www.PaycheckNow.com of Wilmington, DE
- Sonic Cash, LLC d/b/a Sonic Cash Online Payday of Boise, ID
Suit Against Collection Agencies
- A.C.A Recovery, Inc. of Ridgewood, NJ
- Capital Collections, LLC of Miami, FL
- Covenant Management Group, LLC of Gainesville, GA
- Oasis Financial Solutions, LLC of Orange Park, FL
- Westbury Ventures of Wilmington, DE
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Comments
Comment from PublicServiceMsg on March 25, 2009 at 2:15AM EST
Is the Title Loan industry next? Their interest rates are outrageous and they are using the storefront as the capitalizer by way of servicing fees and a nominal interest rate. It still equates to 4-800% per annum and no one is going after them, yet?
Comment from Anonymous on March 27, 2009 at 4:32PM EST
The reason they are "outrageous" is because you do not understnad the product. Payday loans were never intended to be long term loans using standard APR% banking interest rates. Let me help you out. Industry critics regularly confuse "APR" with "interest" Typically the "fee" on a $100 payday advance loan=$15 thats only 15%, but the "APR"=391% Lets look at some other "APR" credit products..$100 bounced check w/$54 NSF& merchant fee=1,409%"APR"...$100 credit card balance with $37 late fee=965%"APR"...$100 utility bill with $46late/reconnect fee=1,203%"APR" need I go on. The continued use or better yet abuse of APR% rates by State and Federal legislators when discussing short-term lending is criminal in my opinion and is only intended to protect the banking and credit industries. Makes you wonder??
Comment from paybill on March 30, 2009 at 11:25AM EST
This guys in WVA are ridiculous. Basically what they have done is allowed 6,612 residents to legally STEAL money. I pointed that out to Mr. Norman Googel, Asst. Attorney General. I don't think it liked it too much, but really didn't have a come back, BECAUSE ITS TRUE. State sponsored theft. What a great place! If you want a loan that you don't have to pay back, just move to WVA!
Comment from Anonymous on June 23, 2009 at 9:16PM EST
Maybe if payday loans and title loan agencies would comply with the WV state maximum allowable percentage rate they wouldn't have a problem. But, instead they would rather take advantage of people in need of the cash, most people that get these loans are in need of cash for an emergency situation. They get what they deserve for taking advantage of their customers.