San Francisco Attorney Sues Payday Loan Lenders
By Paul RizzoPayday Loan Writer
The San Francisco city attorney’s office filed a lawsuit Thursday against two short-term payday cash loan establishments for exploiting borrowers with high interest rates and devious business practices.
Check ‘n Go, which operates three stores in the city, and Money Mart, which operates 12 stores in the city, are the targets of the city attorney’s litigation.
According to the lawsuit, both businesses offer short-term faxless payday loans with interest rates over 400 percent, which violates state law. The suit also claims that the businesses have attempted to circumvent state law by working with an out-of-state bank, the First Bank of Delaware.
City Attorney Dennis Herrera said these payday loan establishments prey on low-income and working-class families who live from paycheck to paycheck.
“Check ‘n Go and Money Mart have targeted working families with an illicit lending scheme that would make a loan shark blush,” Herrera said in a statement. “With annual interest rates exceeding 400 percent, these business practices are not merely unconscionable, they’re illegal - and we intend to put an end to them in California.”
A survey completed in March by a San Francisco group reported that most bad credit payday loan establishments don’t warn their customers of the dangers of high-cost payday loans despite several laws meant to force businesses to provide full disclosure.
According to the California Reinvestment Coalition, a group of 245 nonprofit organizations and public agencies across the state, payday lenders have been taking advantage of lax California regulations for years.
In 2004, Californians spent more than $757 million in loan fees. According to the survey, that number would have dropped severely if only payday advance loan lenders had been more diligent in educating borrowers, a promise that the industry made to consumers through an advertising campaign.
Charisse Ma Lebron, who organized the study, said the lawsuit is a long time in coming.
“CRC commends City Attorney Herrera for protecting consumers, which is unfortunately what the state legislature has failed to do for all Californians,” she said in a statement.
