New York City’s Department of Consumer Affairs (DCA) Monday announced an agreement with a payday loan debt collection agency that will see nearly $1 million in restitution paid to City residents and a six year ban for the company.
DCA said that it has reached an agreement with National Credit Adjusters (NCA) over its collection of illegal payday loans. NCA agreed to pay $962,800 in consumer restitution to at least 4,663 New Yorkers, the highest amount of restitution ever secured by DCA through settlement. In addition, the company is ordered to pay $350,000 in fines.
The agreement requires the company to stop collecting all debts in New York City. NCA is also banned from applying for a debt collection agency license in New York City for at least six years.
The settlement results from an investigation by DCA and resolves the resulting violations that charged NCA with illegally collecting payday loans from New Yorkers, as well as engaging in unlicensed activity, deceptive practices, and threatening to take legal action that it could not take against consumers. The agreement obligates NCA to pay restitution to New Yorkers whom NCA has identified as having short-term loans with interest rates exceeding New York State’s usury cap of 16 percent.
“More than half of payday loan borrowers are already struggling with debt and most turn to these high-interest loans in order to make ends meet to pay ordinary expenses and then ultimately find themselves further trapped in a cycle of debt,” said DCA Commissioner Julie Menin. “Fortunately, payday loans, whether made in-person or online, are illegal in New York. Yet some predatory lenders try to evade the law by making loans online and some debt collection agencies, like National Credit Adjusters, still attempt to collect on these illegal loans. With this settlement, we are able to provide thousands of New Yorkers with relief and send a clear message to debt collection agencies and lenders across the country that DCA will not tolerate the collection of illegal payday loan debt from New Yorkers.”