New York City's Department of Consumer Affairs on Friday filed a complaint to ban National Credit Adjusters LLC, a Hutchinson, Kan.-based collection agency, from operating in the city.

The city's consumer watchdog has been cracking down on collection agencies that allegedly pursue residents over high-rate loans. The agency in April denied the company's request for a license renewal that allows it to collect on debts from city residents.

The agency at that time found National Credit Adjusters was collecting on so-called payday loans and other high-rate loans that violate New York state law that limits most annual interest rates to no higher than 16%. Officials at National Credit Adjusters could not be reached for comment.

Industry analysts believe there are dozens of online lenders skirting various state rules by issuing their loans via the Internet, instead of through physical storefronts. At least 15 states, including New York, effectively ban payday loans.

Consumer groups traditionally focus their efforts on companies making loans to consumers, but recently have called on regulators to scrutinize firms such as banks and payment processors that provide services to those lenders.

"Online payday lenders present different legal and consumer protection challenges than storefront high-cost lenders," several consumer organizations, including the Center for Responsible Lending and National Consumer Law Center, wrote in a letter Thursday to regulators, including the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corp. "These online lenders routinely market and originate loans with terms and conditions that violate the law of the state where the borrower resides."

New York Department of Financial Services Superintendent Benjamin Lawsky, the state's top banking regulator, in August sent cease and desist letters to 35 online lenders that he alleged were violating the state's interest-rate cap. He also urged banks to end any relationships they have with such lenders for processing loan payments.

In April, Arkansas Attorney General Dustin McDaniel's office reached an agreement with National Credit Adjusters that also required the firm to stop trying to collect on illegal payday loan debt in the state.

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