SANTA FE, N.M. (Legal Newsline) - New Mexico Attorney General Gary King announced on Wednesday that his office has won a three-year legal battle against a small loan lender that allegedly made illegal loans to New Mexico consumers.
Under the terms of an order from Santa Fe District Judge Michael Vigil, FastBucks LLC must pay restitution to consumers and cease making illegal loans and will be unable to enforce specific current loans that do not comply with state law.
"New Mexico law prohibits the kinds of business practices and exorbitant interest rates by which FastBucks has been victimizing consumers for years," King said. "The judge agreed with our contention that FastBucks' installment loans and associated lending practices were unconscionable as a matter of New Mexico law.
FastBucks LLC allegedly took advantage of the lack of knowledge of borrowers, which resulted in some borrowers paying back more than twice the amount originally borrowed. King says Fastbucks' 12-month installment loans with APRs of 520 to 650 percent violated the New Mexico Unfair Practices Act. FastBucks also allegedly took advantage of consumers by encouraging them to remain indentured to the company in a cycle of debt that would never end.
The company allegedly created installment loan products in 2007 to circumvent efforts by the New Mexico legislature's attempts to stop payday loan abuses. FastBucks' business model allegedly depended on encouraging recurring indebtedness and created exorbitantly expensive obligations of repayment.
Under the terms of the order, FastBucks is permanently enjoined from originating its installment loans and New Mexico consumers have been awarded restitution measured by the amount of money the borrowers paid above what they would have paid if they were given a state-regulated payday loan. The amount of restitution could be in excess of $10 million, King says.