Suthers, lender reach settlement
DENVER (Legal Newsline) - Colorado Attorney General John Suthers announced Wednesday that his office has reached a settlement with a small-investment lender that will require a surrender of its lending license in the state.
The agreement, reached with Security Finance, which operated 13 branches in Colorado, requires the company to refund certain fees it charged consumers from 2004 to present.
The lawsuit, filed in June 2008, alleges Security Finance violated the Uniform Consumer Credit Code through unlawful business practices by preventing its customers from paying back their small-installment loans. The company allegedly refinanced its consumers' small-installment loans to maximize the number and amount of acquisition fees it could charge.
"Colorado's lending laws are designed to ensure that consumers are given a fair shake when they need to borrow money," Suthers said.
"My office is dedicated to vigorously pursuing lenders that violate Colorado law by taking advantage of consumers. This case marked the first time my office alleged a lender was making loans to consumers who had no reasonable ability to pay off the loans."
According to state law, small-installment loans are limited to no more than $1,000 and must be repaid within 12 months in substantially equal installments.
Colorado caps the number of refinances that are allowed each year at three and bars lenders from making loans to people who do not have a reasonable ability to repay them.
In addition to refunding the acquisition fees it charged customers in excess of the three refinances in a year, Security Finance agreed to surrender its lending licenses in the state. The company has also agreed to pay $125,000 for the state's attorney and expert witness fees.