New York Touts $3M Payday Loan Settlement

     MANHATTAN (CN) — In its first such action, New York’s top financial watchdog reached a $3 million settlement Wednesday with two debt-buying companies that improperly bought and collected on illegal payday loans.
     Data from Community Financial Services Association of America, an industry trade group, shows that more than 19 million U.S. households, or nearly 1 in 6, have taken out payday loans.
     Because these relatively small, high-cost loans tend to target poor people trapped in a spiral of debt, however, the practice is illegal in New York.
     The state’s Department of Financial Services said today that two debt-buying companies — National Credit Adjusters, a Kansas-based LLC known as NCA, and Webcollex, a Virginia-based LLC doing business as CKS Financial — spent years collecting usurious payday loan debts banned here.
     Under the consent decrees released today, NCA will discharge more than $2.26 million worth of New York consumers’ payday loan debts that it collected between from 2007 to 2014. The settlement includes refunds to consumers of more than $724,000 to more than 3,000 people.
     CKS will pay more than $66,000 in refunds to 52 New Yorkers, and discharge more than $52,000 in debt it collected between 2012 and 2014, according to the consent decree.
     The financial watchdog calls this the first time the agency’s settlements have provided consumer restitution to New Yorkers harmed by payday loans.
     Maria Vullo, the watchdog’s Acting Superintendent of Financial Services, said in a statement that today’s announcement sends a “clear message that New York State will not tolerate those who attempt to profit from illegal payday loan activity.”
     “Payday lending is illegal in New York, and debt collectors, like National Credit Adjusters and CKS, who collect or attempt to collect outstanding payments from New Yorkers in violation of New York State and federal Fair Debt Collection Practices laws will be held accountable,” Vullo said.

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