By: Jer Trihouse. Man, it’s good to be a state licensed car title loan lender!
New York Attorney General Schneiderman Reaches Settlement With Auto Title Loan Company To Refund Interest On Usurious Loans And Forgive Outstanding Loan Balances
NEW YORK – Attorney General Eric T. Schneiderman today announced a settlement with an out-of-state company that offered short-term loans, secured by borrowers’ vehicles, at usurious rates of interest. Under the terms of the settlement, the company agreed to cease doing any loan business in New York in violation of the New York law.
Manor Resources LLC (Manor), a Delaware corporation with its principal place of business in Chicago, IL, operates a website through which it conducts its nationwide loan business. All applications for its auto title loans are made through the website. The stated interest rate is 10 percent per month, or 120 percent Annual Percentage Rate (APR). Manor takes a security interest in the borrowers’ automobiles which, in the event of default, may lead to repossession of the motor vehicles.
“Lenders that bypass our state’s usury laws to prey upon struggling New Yorkers will continue to be held accountable and penalized for their actions,” Attorney General Schneiderman said. “New York is not open for business to predatory online lenders, and Manor is just the latest company to learn that lesson. My office will continue to monitor the web for businesses like Manor so that we can put an end to these illegal practices and protect New Yorkers in financial distress.”
New York Banking Law §340 makes it unlawful to engage in the business of making loans in the principal amount of $25,000 or less to an individual for personal, family, household, or investment purposes and charge greater than 25 percent interest without first obtaining a license from the State Superintendent of the Department of Financial Services. Without such a license, the maximum interest rate a lender is permitted to charge by law (General Obligations Law §5-501 and Banking Law §14-a) is 16 percent APR. New York Penal Law § 190.40 makes it a crime to charge interest at a rate exceeding 25 percent APR.
Manor’s loan contracts required that all disputes between the parties had to be resolved through arbitration in Illinois rather than through the courts. The settlement provides that loan agreements hereafter used in New York shall not have any mandatory arbitration clauses.
The agreement also provides for all loan accounts on which a balance is currently owed, whether such accounts are current, delinquent, in default, or charged off, to be closed with a zero balance. In addition, the agreement requires the company to notify any consumer reporting agency to which it gave consumer information to delete all references to the transactions from customers’ credit records. The company will pay the Attorney General’s Office $23,120, representing all interest and fees (but not principal) that it collected from New York residents, and the Attorney General’s Office will distribute refunds to eligible consumers. In addition, the company has agreed to pay the Attorney General $10,150 in costs and penalties.
This matter was handled by Special Assistant Attorney General Stephen Mindell and Assistant Attorney General Herbert Israel of the Consumer Frauds and Protection Bureau, under the supervision of Jane M. Azia, Bureau Chief of the Consumer Frauds and Protection Bureau, and Karla G. Sanchez, Executive Deputy Attorney General for Economic Justice.
How to Start a car Title Loan Business: AutomobilePawn.com