PRN: Herrera kicks off 3-month push to refund $7.5 million to borrowers from payday lenders

Herrera kicks off 3-month push to refund $7.5 million to borrowers from payday lenders

Settlement with Money Mart/Loan Mart requires restitution to customers statewide over fraudulent lending, marketing practices

[09-July-2012]
SAN FRANCISCO, July 9, 2012 /PRNewswire/ — City Attorney Dennis Herrera today launched a three-month statewide outreach effort to refund up to $7.5 million to California consumers who obtained short-term installment loans from Money Mart and Loan Mart from 2005 through 2007, and oversized payday loans from Money Mart and Loan Mart in 2005. Borrowers who received such loans as a result of the storefront lender’s predatory schemes during that time may be eligible for repayment of most of the interest, fees and finance charges they paid in amounts ranging from $20 to $1,800.

The restitution program is among the terms of an agreement Herrera’s office negotiated to settle his office’s 2007 consumer protection lawsuit against the payday lenders and an affiliated out-of-state bank for unfair and fraudulent business practices. The alleged wrongdoing stemmed from the lenders’ marketing of short-term installment loans and oversized payday loans, usually targeted to low-income borrowers, at exorbitant and illegal interest rates. While the settlement required the lenders to engage an independent administrator to make “reasonable efforts” to contact all eligible claimants, Herrera’s office is authorized to undertake an additional statewide outreach effort in advance of the Oct. 1, 2012 deadline to reach all potential claimants who may have moved, or who may have dismissed or misunderstood letters from the restitution administrator.

“If we’re to truly bring justice to victims of predatory payday lending in California, we must work quickly and aggressively to maximize restitution for all the borrowers who deserve it,” said Herrera. “Money Mart and Loan Mart have agreed to commit $7.5 million toward refunding their customers—but they need only make a ‘reasonable effort’ to identify them. Payday and installment loan borrowers tend to be renters, who may move more frequently than homeowners, and can be difficult to locate. That’s why this three-month outreach effort is so important. We will be working tirelessly for the next three months to identify as many potential claimants as possible, and to benefit all the hardworking Californians who deserve restitution. I hope our case against Money Mart and Loan Mart will send a strong message to all fin ancial institutions about their responsibility to adhere to honest lending and marketing practices.”

Herrera’s office is asking for assistance from all reporters, editors and broadcasters who cover consumer affairs issues in California to assist in identifying all potential claimants statewide to learn more:

  • By visiting MoneyMartSettlement

Also under terms of the settlement agreement, Money Mart and Loan Mart are required to forgive $8 million in other debt owed by California consumers. In addition, the company will pay the City and County of San Francisco $875,000.

The case is: People of the State of California ex rel. Dennis Herrera v. Check N’ Go of California, Inc., et al. (San Francisco Superior Court Case No. CGC-07-462779). More information is available online at http://www.sfcityattorney.org.

SOURCE City Attorney Dennis Herrera

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