New York AG Settles Suit Against Internet Payday Lenders

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On January 24, New York Attorney General (AG) Eric Schneiderman announced the resolution of a lawsuit filed in August 2013 against Native American tribe-affiliated payday lending firms and their owners for allegedly violating the state’s usury and licensed lender laws in connection with their issuing of personal loans over the Internet. The AG claims that the companies charged New York consumers annual interest rates on payday loans far in excess of the 16% rate cap set by state law. According to the announcement, the defendants agreed to modify the terms of all outstanding loans made to New York borrowers and to not collect interest on outstanding loans. The defendants also must provide refunds to borrowers who have paid back more than the principal of their loan plus the state-capped interest rate of 16%, and pay $1.5 million in penalties. The companies also must become licensed in New York before offering new loans in the state.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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