New York Attorney General Eric Schneiderman is cracking down on firms that collect debts for payday lenders.
The state has reached a settlement with five firms under which they would be prevented from collecting on certain loans and pay restitution to customers, Schneiderman's office announced Monday. The five companies have agreed to pay more than $300,000 in restitution and penalties and to reverse 8,550 negative credit reports they have filed on their customers. They also have been prohibited from collecting interest on more than $3.2 million of loans.
Moreover, the five companies, which are all based in the state, will be barred from collecting on payday loans to New Yorkers. The five companies are V&R Recovery in Kenmore; RJA Capital in Buffalo; Westwood Asset Management in Buffalo; Erie Mitigation Group in Orchard Park; and Northern Resolution Group in Amherst.
"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," Schneiderman said in the news release.
Schneiderman and Benjamin Lawsky, the superintendent of New York's Department of Financial Services, have been leading the state's crackdown on payday and online consumer loans, which they say often violate New York's 16% interest-rate cap.
In August, Schneiderman filed a suit against three online lenders that he claimed violated the state's usury cap. One of the lenders, Western Sky, which is associated with an American Indian tribe in South Dakota, shut down soon after.
Lawsky has said he hopes to "choke off" access to payments networks for payday lenders that violate interest-rate caps, and has called on banks to cease doing business with a group of online lenders with tribal affiliations.
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Corrected October 1, 2013 at 3:12PM: An earlier version of this story incorrectly stated that New York Attorney General Eric Schneiderman is cracking down on five payday lenders. The targets are firms that collect debts for payday lenders.