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Ark. AG sues payday lender

By Bryan Cohen | Jun 21, 2011


LITTLE ROCK, Ark. (Legal Newsline) - Arkansas Attorney General Dustin McDaniel announced on Monday that he has filed a lawsuit against a Kansas-based debt collection agency that allegedly failed to fully answer two formal investigative requests.

National Credit Adjusters LLC of Hutchinson, Kan., allegedly refused to answer requests regarding the agency's practice of collecting on payday loans. McDaniel's suit asks the Pulaski County Circuit Court to compel the agency to respond to his civil investigative demands.

McDaniel alleges that the limited information provided by NCA shows that the agency is seeking to collect old payday-lending debts. Payday lending is illegal in Arkansas.

"We have successfully stopped usurious storefront payday lending in this state, and to date we have also shut down more than 30 online payday lenders, yet the ripple effects from this illegal business continue to harm Arkansas consumers," McDaniel said. "Our office will continue its effort to prohibit activities related to payday lending, whether it's by pursuing online payday lenders or a company like this, which is trying to collect on debts that were illegal in the first place."

The suit alleges that NCA purchases the right to collect on delinquent obligations from either the original creditor or a third-party owner of the debt. NCS allegedly claims to own accounts originating from a number of payday lenders, including Advance America, Check N' Go, BMG Accounts, Cash Net, Global Payday, Rapid Cash for You, FNS Payday Loans, Check into Cash, Ace Cash Express, Cash Central, Internet Payday, Internet Payday Loans, and Sonic Cash Payday Loans. McDaniel maintains that debts from these types of lenders are not enforceable under Arkansas law.

McDaniel's suit asks the court to prohibit NCA from collecting from Arkansas consumers until it answers the investigative requests and provides all of the requested documentary evidence.

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