New York Attorney General Eric Schneidermans office has reached settlements with five companies charged with violating the states usury and licensed lender laws through the collection of payday loans.
V&R Recovery DBA Alexander & Stefano, RJA Capital Inc, Westwood Asset Management LLC, Erie Mitigation Group LLC and Northern Resolution Group LLC agreed to pay a total of $279,606 in restitution and $29,606 in penalties, the AG's office reported.
One debt-buying company will reverse 8,550 negative credit reports made to credit-reporting bureaus on New Yorkers, and is prohibited from collecting on $3.2 million in payday loans, according to the settlement. That firm is expected to be named during a news conference Monday. All five companies also are banned from collecting on payday loans from New Yorkers.
New York law limits interest rates for most lenders not licensed by the state to a maximum of 16%. But payday loans - taken out short-term, typically ahead of an employees paycheck to be repaid with earnings later received - can have annual rates of 100% to 650%, or even more, Schneidermans office said in a statement.
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, he said in the statement.
New Yorks Department of Financial Services last month reported it had sent letters to 35 payday loan companies asking them to stop offering exploitative payday loans in New York via the Internet or by other means.
New York Governor Andrew Cuomo has said that illegal payday loans made over the Internet are made possible in New York by transactions that must pass through a specific financial electronic network and has called for collaboration between the networks administrators, the banks and his administration to cut off access to payday lenders.
Schneiderman also has launched other similar probes. In July, he sent letters to some of the countrys largest companies over their use of cards to pay hourly employees, according to a person familiar with the matter.
The cards, which have grown in popularity in lieu of paper paychecks and direct deposit, can carry a host of fees, such as 50 cents or $1 for a balance inquiry and $1.50 for an ATM withdrawal. They may appeal to low-wage workers who do not have bank accounts.