Lawsuit Filed Against Florida Payday Loan Company for Lack of Disclousure
By Desmond CarlislePayday Loan Writer
In Florida, payday loan controversy continues to erupt. The latest?
A state unit of EZCorp Inc., one of the nation's largest pawn-shop chains and payday cash advance lenders, is taking heat from state regulators who accuse it of operating unlicensed offices and stonewalling an investigation of its lending activities. The Orlando Sentinel had the report.
EZCorp's Florida operation, which includes EZPawn and EZPawn Money Payday Loan Store, has failed to register with the state or obtain a license to make payday loans, according to a lawsuit filed recently in state Circuit Court in Orlando. Allegedly, EZPawn Florida Inc. unlawfully blocked examiners from inspecting its loan papers and other records.
Specifically, an instance from three months ago involving an EZPawn store on East Colonial Drive in Orlando is cited. Managers at the store refused state agents access to their records. Despite a series of letters and discussions, the payday loan company has refused to cooperate with the state, regulators say.
What the payday loan suit seeks: An order compelling the company to let regulators inspect the books and records at the Colonial Drive location. It also seeks an administrative fine of $1,000 a day until the company complies.
The EZPawn operation has at least 18 locations in Florida, including six in Central Florida. With annual revenue of more than $250 million, the publicly traded company ranks among the major players in the payday advance loan industry.
State payday loan laws: Florida's cash advance law, passed in 2001, limits people to one $500 loan at a time, caps fees at 10 percent of the transaction amount, and bans lenders from rolling unpaid balances over into another loan. Although regulators have launched dozens of cases against unregistered payday lenders in recent years, they have rarely encountered a case such as this, said Rick White, director of the state's securities and finance division.
"I really can't recall another case recently when we sued a company because they wouldn't allow us access to records," he said. "It's just very unusual."
The Sunshine State has initiated 38 cases against unregistered payday loan lenders, check cashers and other financial-services businesses in the past two years, resulting in $134,000 in fines, according to White. Consumer advocates say stronger action is now needed against payday advance lenders such as EZCorp.
"They're certainly one of the largest, and we've received a lot of complaints about them," said Matthew Lee, co-founder of Inner City Press/Fair Finance Watch, a consumer-watchdog group based in New York City. "We applaud any state regulator who would try to sue them. The payday loan business is based on the desperation of consumers [and] not informing them about the consequences of what they're doing."
Florida regulators said, however, that their investigation of EZPawn was not triggered by consumer complaints. White, the finance division chief, said the agency became aware of EZPawn while investigating another instant payday loan lender.
"We know they are not licensed or registered," he said. "Right now we're just trying to obtain the necessary documents to determine whether they need to be registered or not."
