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Attorney General to Payday Lenders: Stop or He’ll Sue!
Posted By Alejandra Owens On March 20, 2008 @ 4:52 pm In Notebook | 2 Comments
An update from AARP Arkansas’ Pat Jones:
Licensed payday lenders in Arkansas are receiving what some consider their walking papers from Dustin McDaniel, the state’s Attorney General, in the form of a strongly worded letter. That gives AARP Arkansas and other members of a broad-based coalition against payday lending reason to celebrate.
“These businesses have made a lot of money on the backs of Arkansas consumers, mostly the working poor. Charging consumers interest in the range of 300 to 500 percent is unlawful and unconscionable, and it is time that it stops,” McDaniel reportedly said during a news conference on March 18th. “It is my hope that they comply with my demand but, if they do not, I stand ready to take them to court.”
Calling payday lending a “deceptive and unconscionable trade practice” prohibited by the Arkansas Deceptive Trade Practices Act (DTP A), McDaniel’s letter demands tells payday lenders to “cease and desist” payday lending
practices immediately, void all current and past-due obligations of their borrowers, and halt any collection activities related to these type loans.
The AG’s announcement adds fuel to the fire created by two recent, precedent-setting state Supreme Court decisions on payday lending. The court rulings state that two bonding companies are liable for paying bonds to partly cover judgments against payday lenders. The state requires a $50,000 bond for every payday lending store, and the court ruling could cause bonding companies to consider bonding payday lenders too risky. Peggy Matson, executive director of the state agency which regulates payday lenders, told the Democrat-Gazette newspaper, “If they cannot obtain a bond, then we cannot grant them a license.”
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