New York Department of Financial Services secures $12 million payout for victims of payday loan call center
Inside Subprime: September 26, 2017
By Caroline Thompson
New York Financial Services Superintendent Maria Vullo announced yesterday that her department has secured nearly $12 million in loan forgiveness and a $45,000 penalty from Total Account Recovery (TAR) LLC, a payday loan debt collector, and eFinance call support center (called E-Finance). TAR has been illegally collecting on payday loans made to people in New York, a state which has banned payday lending.
“Payday lending is illegal in New York, and DFS will not tolerate predatory actors in our communities. Debt collectors like TAR, who collect or attempt to collect outstanding payments from New Yorkers on payday loans violate debt collection laws, and will be met with swift action,” said Vullo in a press release. “A payday loan servicer like E-Finance makes unlawful misrepresentations to New Yorkers when it sends notices of payments due and negotiates payment agreements with New York consumers for payday loan payments that are not legally owed under New York law. DFS will continue to take aggressive action to protect New Yorkers and send a clear message to those who attempt to profit from illegal payday loan activity.”
Between 2011 and 2014, TAR had attempted to collect on more than 20,000 payday loans, which carried a greater annual interest rate than is legally allowed in the state of New York. New York civil usury limits are 16 percent, and criminal usury limits are 25 percent. TAR also used unlawful collection tactics while trying to get victims of these payday loan schemes to pay up. According to DFS, both TAR and E-Commerce “repeatedly called consumers at home and at work, and sometimes threatened consumers to pressure them to pay their alleged payday loan debts.”
TAR will forgive $11.8 million in unpaid debt, vacate any judgments obtained on this debt, and release all wage garnishments, levies, liens, restraining notices or attachments related to any of those judgments. It must also close all pending New York accounts and stop communicating with customers.
To learn more about the dangers of payday lending, check out our payday loan information page.