Going to a payday lender can be a good financial decision. That is, if your Attorney General threatens to sue your payday lender, and they settle up, and then you receive your money back.
New York Attorney General Andrew M. Cuomo has just announced a $5.2 million settlement with two companies running "payday loan" companies.
Cuomo's office will be sending money to more than 14,000 victims. You may be one of those victims if you live in New York and have ever taken out a small loan with the businesses, Telecash or Cashnet.
If that's the case, and you're now thinking, "Wait a minute, I didn't know about this," well, now you know, and you can call the Attorney General's Help Line at 1-800-771-7755, if you have questions.
People will receive anywhere from $10 to more than $4,500. What victims get will be based on the amount of interest that they paid. You have to fill out a form and presumably offer some sort of proof of your loan, and then you'll get your check. There are a large contingency of consumers in the Bronx and Brooklyn who wound up using Telecash or Cashnet.
For the most part, there aren't a lot of payday loan centers in New York -- due to them not being allowed to offer loans with an interest rate over 16% -- but according to the Attorney General's press release, these two companies, TC Services Corporation (doing business as Telecash) and CRA Services Inc (d/b/a Cashnet) were using a bank in Delaware, County Bank of Rehoboth Beach, Del. to get around the New York laws. That's why the Attorney General's office is referring to this as a "rent a bank" scheme.
I can't help but wonder what customers of County Bank will think when they hear about this, and how this will affect County Bank's reputation.
Delaware doesn't limit the amount of interest on a loan, which is why these payday loan centers were able to charge people over -- hold onto your hat -- 500% interest.
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