Utah loan firm Global Payday Loan among 3 sued over rates, licenses
Deseret News (Salt Lake City), Apr 1, 2010 by Brian Bakst Associated Press
ST. PAUL, Minn. — Minnesota Attorney General Lori Swanson on Wednesday sued three Internet companies offering short-term loans, including one Utah-based firm, accusing them of operating without proper registration and charging interest rates that topped 2,700 percent in one case.
Swanson’s lawsuits in state court mark the latest legal offensive against the payday loan industry and follows similar actions in California, Illinois and West Virginia.
She said all three — East Side Lenders of Delaware, Global Payday Loan of Utah and Jelly Roll Financial of Virginia — failed to register with Minnesota regulators and exceeded state caps on loan charges.
The companies, Swanson alleged, are “trapping these citizens into a spiral of debt.”
The lawsuits seek to force the companies to comply with state law or cease business in the state. They also ask for unspecified penalties and restitution, but Swanson didn’t know how many consumers might be affected.
Minnesota law limits interest rates for short-term loans. For instance, on loans between $50 and $100, charges are capped at 10 percent with a $5 administrative fee limit.
But Swanson said the companies went well beyond the limits and tacked on extra finance costs if they missed payment deadlines.
According to court papers, Global Payday charged some borrowers $30 for each $100 they were loaned.
Payday loans are designed to help borrowers get from one paycheck to the next.
“These are consumers that are at their very most financial distress,” said Dana Badgerow, head of Minnesota’s Better Business Bureau. “They signed up for these short-term loans and discovered that instead of improving their financial situation, they’ve made it worse.”
Badgerow said her office has received hundreds of complaints against the companies involved.
East Side argued in a letter to Swanson that it is exempt from Minnesota’s law
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