The Department of Consumer Affairs (DCA) in New York City Friday filed an enforcement action to permanently bar a collection agency from operating in the city. The firm, according to the complaint, had its license revoked to collect in NYC over its focus on payday loans.

Despite losing its license to collect in April, the DCA said National Credit Adjusters LLC continued to call city residents to recover payday loan debt. The regulator denied the collection agency’s application for a license renewal because it was collecting on payday loans.

Payday loans are functionally illegal in New York. State law prohibits loans that carry an interest rate above 16 percent, a threshold which most payday loans cannot meet.

The DCA and other of New York’s regulators have increasingly been targeting payday lenders and the ARM companies that focus on the short-term loans. Superintendent of Financial Services, Benjamin M. Lawsky in August sent a letter to banks operating in the state reminding them that short-term loans with interest greater than 16 percent are illegal.

Lawsky’s August letter followed a similar one issued in February to debt collectors reminding them that, again, payday loans are illegal in the state and that companies should not collect on them.

New York Attorney General Eric T. Schneiderman has also been active in enforcing the law, announcing actions against ARM firms operating in the payday loan sector earlier this month.

For its part, National Credit Adjusters is no stranger to controversy over its collection activities in the short-term loan space. The Attorney General of Arkansas in March announced a settlement with the firm over…well, take a wild guess. has recently been offering a ton of premium reports and webinars to help ARM companies comply in a shifting regulatory environment. Many issues are quite complicated and require in-depth analysis and legal positioning. But here’s some pretty simple advice we can give away for free: if state laws prohibit payday loans, don’t buy or attempt to collect on payday loans in that state.


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