Keith Loria Oct. 21, 2010, 2:57pm
BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced on Wednesday that she has reached settlements with two payday lenders that allegedly sold high-interest loans in the state.
The Delaware-based Nationwide Cash and Nevada-based Paragon Funding both allegedly offered small short-term loans on the Internet. These payday loans were generally granted for a few hundred dollars or less and required repayment within two to four weeks, it is alleged.
The companies would allegedly extend the loans and add excessive additional fees to the debt for consumers unable to repay the loan principal, fees and interest.
"Payday lenders often prey on residents who are already under a great deal of financial stress, and who may have no idea that these interest rates violate Massachusetts law," Coakley said. "These loans can have a devastating impact on an individual's bank account and credit report in a very short amount of time."
Under terms of the agreements, both companies are banned from engaging in any further business in Massachusetts and are required to return all interest charges and fees paid by Massachusetts consumers beyond their principal loan amount.
Nationwide Cash and Paragon are also required to forgive all outstanding balances on the illegal loans.