TUCSON (CN) - The Arizona attorney general says a payday loan company duped hundreds of rural borrowers by suing them for nonpayment in a court far from their homes, setting up a "veritable assembly line of default judgments." Arizona says Kansas-based Quik Cash, one of the biggest payday lenders in the country, is "cramming the dockets" of the Pima County Justice Court with small claims against rural borrowers who are unlikely to make the trip to Tucson from distant parts of the state.
A Pima County judge granted Attorney General Terry Goddard's request for a preliminary injunction barring Quik Cash from filing lawsuits in courts outside a borrower's home county, and from going forward with those already filed.
Goddard says Quik Cash is running the age-old scam of "distant forum abuse."
"Due to the distance of the forum from the consumer's residence and the expense of defending, the creditor easily obtains default judgments and the consumer is prevented from raising defenses or contesting the claim," Goddard says. "The harm from distant forum abuse ranges from dramatically increasing the total debt burden on consumers to making it less likely consumers will respond in court, effectively depriving consumers of their day in court."
Quik Cash has about 38 outlets in 12 Arizona counties. Goddard sued Quik Cash and its parent QC Holdings Inc., seeking up to $5 million in restitution and asking the court to set aside hundreds of small claims judgments.
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