New York regulators on Wednesday announced settlements with four companies accused of financing retail installment obligations at usurious rates of interest, ranging up to 55%, for New York consumers who sought financing for elective medical and surgical procedures.

Under the terms of the settlement with New York Attorney General Eric T. Schneiderman's office, the companies agreed to recast the RIOs to the legal interest rate – no more than 16% -- and will provide approximately $230,000 in repayments or credits to more than 300 New York consumers.

The companies are: MyMedicalloan.com, doing business as Surgeryloan.com, a California firm; Duvera Billing Services LLC , also based in California; Highlands Premier Acceptance Corp., a Colorado company and Paramount Capital Group Inc., based in Pennsylvania.

The companies were not licensed to finance retail installment obligations (RIOs) in New York. Under state of New York law, a company that sells RIOs must be licensed as a sales finance company or lender.

An RIO is similar to a loan in that both involve an agreement to pay back borrowed sums of money, plus interest, over a period of time. But they differ in that a loan is typically between a consumer and a bank and a RIO is an arrangement between a purchaser (in these cases, a patient) and seller (medical provider, in this example) of a good or service, with the financing company offering the loan service.

The settlement means that 317 people – most of whom live in New York City, Westchester, N.Y. and on Long Island – will receive approximately $230,000 in refunds or credits.

Medical providers may recommend financing options, including RIOs, to patients who are unable to pay out of pocket for elective medical surgical services, if insurance does not cover the procedure. Patients typically file online credit applications with a company that acts as a broker and the company links the application to potential financiers.

An investigation into the companies began after the Attorney General’s Health Care Bureau received a complaint from a consumer about Surgeryloan.com.

Surgeryloan.com operated as a broker of RIOs between medical providers and financiers, providing a web-based application platform that consumers and providers were able to access. The platform requested information regarding the consumer’s employment and credit history, automatically set the annual percentage rate and RIO repayment terms and submitted the completed application to sales finance companies that were potential financiers of Surgeryloan’s RIO applicants.

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