Minnesota settles lawsuit with online payday lender
Dec 19, 2012 (Pioneer Press - McClatchy-Tribune Information Services via COMTEX) --
An unlicensed "payday lender" that does business online will pay a $760,000 fine and stop lending to Minnesota residents until it's in compliance with state laws, part of a lawsuit settlement announced Wednesday, Dec. 19.
Sure Advance LLC, which made loans to more than 1,200 Minnesota residents, also agreed to get properly registered in the state before it can lend to residents.
"Unlicensed Internet lenders charge astronomical interest rates, and many consumers who have applied for loans on the Internet have seen their private information end up in the hands of international criminal fraud rings," Lori Swanson, Minnesota's Attorney General, said Wednesday.
One of the Sure Advance consumers who will benefit from the legal settlement is Yvette Wickner, a call center supervisor from Apple Valley. She had taken out two loans with Sure Advance a year or two ago, and said an earlier experience with a different online lender had worked out all right.
But her experience with Sure Advance "was nothing like that other one at all," Wickner said Wednesday. "I couldn't believe that they could possibly charge you that much."
She had co-signed on a car loan for a relative who lost a job, which led to Wickner's money pinch, she said. The details of the loan were hidden in the small print, and one of her two loans -- which was for $400 -- ended up costing her close to $1,200 total.
Wickner said she's embarrassed now to have taken the loan, but wants people to know
that payday lenders are not the answer, and that the details are buried in the fine print.
"And there's a ton of these (payday lenders) online," she said.
Swanson's settlement with Secure Advance will return about 90 to 95 percent of the interest she paid on her loans, Wickner said.
Swanson's office had sued Sure Advance and four other Internet lenders in September 2011, after an investigation found that some were charging unlawfully high interest rates of up to 782 percent.
Payday loans typically are short-term, high-interest loans for $500 or less. The lenders target borrowers who need cash between paychecks, and the loans often come with recurring finance charges as well. Refinancing of the loans also can cause the debt to pile up quickly.
A Sure Advance employee reached Wednesday at its Delaware headquarters said the company would not comment immediately, though a request for comment could be sent through U.S. mail.
Swanson has sued eight total payday lenders since 2010. To date, seven of those have settled the lawsuits, including Sure Advance, with the total fines near $1 million, her office said.
The online lending industry has boomed in recent years, with an estimated loan volume in 2011 of $13 billion loaned to millions of customers, according to industry statistics. A Minnesota law that took effect in 2009 says that payday lenders who do business in the state have to comply with state laws even if their physical headquarters are out-of-state.
Minnesota laws limit payday lenders to charges of 33 percent annual interest and a $25 administrative fee for loans between $350 and $1,000. Fees for loans less than $350 are capped based on a sliding scale.
The $760,000 fine paid by Sure Advance will go into a consumer restitution fund, and will be used to refund Minnesota consumers who paid unlawful interest charges and fees.
To see if a payday lender is licensed with the state, consumers can visit the Minnesota Department of Commerce website and use a license look-up tool.
John Welbes can be reached at 651-228-2175.
___ (c)2012 the Pioneer Press (St. Paul, Minn.) Visit the Pioneer Press (St.
Paul, Minn.) at www.twincities.com Distributed by MCT Information Services
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