Four nonbank lenders have agreed to reimburse consumers and pay penalties in connection with medical loans that violated New York usury and other laws, state Attorney General Eric Schneiderman said Wednesday.

The lenders were accused of financing so-called retail installment obligations at interest rates of as high as 55%; patients sought them to pay for procedures uncovered by insurance.

Under New York banking law, unlicensed lenders can charge an annual percentage rate of up to 16%. Meanwhile, New York's penal law bars rates above 25%.

Furthermore, the four firms were not properly licensed lenders or sales finance companies, Schneiderman's office said in a release Wednesday.

The four lenders that agreed to settlements were: MyMedicalloan.com, which did business as Surgeryloan.com; Duvera Billing Services; Highlands Premier Acceptance Corporation; and Paramount Capital Group.

They did not admit wrongdoing but must pay more than 300 New York consumers about $230,000 in reimbursements or credits and pay a total of $35,000 in penalties. The firms also agreed to stop operating as unlicensed sales finance companies in New York and notify any consumer reporting agencies to delete all references to the transactions from customers' credit records.

Unlike a traditional loan made between a consumer and a bank, an RIO is an arrangement between a purchaser, in this case a patient, and a seller, such as a medical provider, for a good or service, with the financing company offering the loan service. Once a financier agrees to purchase the RIO, the doctor and the patient both sign a financing agreement that the provider immediately assigns to the financier. The financier pays the provider, while the provider agrees to accept less-than-customary fees in exchange for upfront payment.

"Sales finance and other loan companies that bypass our state's licensing and usury laws and target New York consumers will be held accountable," Schneiderman said in the release. "This behavior is particularly egregious when it targets vulnerable consumers seeking medical treatment with high-interest loans."

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