Jessica M. Karmasek Jul. 21, 2010, 10:57am
CHARLESTON, W.Va. (Legal Newsline) - West Virginia Attorney General Darrell McGraw announced on Wednesday he reached a settlement with FFD Companies, operators of at least five Internet payday loan Web sites, for more than $300,000.
Under the settlement, FFD must refund allegedly illegal fees and interest to West Virginians and halt marketing within the state.
The defendants will pay a total of $305,446.53 to 576 affected consumers in the state who obtained payday loans through interactive Web sites operated by the company.
"Payday loans are not solutions but treacherous traps that can lead to financial ruin for the many West Virginians facing difficult financial circumstances," McGraw said in a statement.
FFD, which denied any wrongdoing, agreed to a permanent ban on making or collecting payday loans in the state, McGraw's office said.
"We will not rest until all payday lenders agree, as the FFD Companies have now done, to stop marketing these predatory payday loans over the Internet to West Virginia consumers," he said.
McGraw filed a complaint against the company in a November lawsuit. In it, his office charged the defendants "had engaged in the making and collection of" Internet payday loans in violation of West Virginia law. Such loans are illegal in the state.
Payday loans are high-interest loans or cash advances with interest rates that reach as high as 800 percent APR. The loans, typically made for 14 days, are secured by a post-dated check or an agreement authorizing electronic debits from the consumer's checking account.
Since McGraw began investigating the industry in 2005, his office has reached settlements with 107 Internet payday lenders and their collection agencies, resulting in $2,452,978.87 in refunds and cancelled debts for 8,044 West Virginians.
As negotiated by the Attorney General's Consumer Division, the settlement involves eight corporations under the FFD umbrella and their principals, with offices in Delaware, Georgia, New Mexico, Nevada, Texas and Utah.