Martha Coakley (D)
BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley said Thursday that her office has reached a settlement with an online payday lender that was charging up to 600 percent interest for short-term loans.
Under terms of the settlement, payday lender FastBucks has agreed to stop doing business in Massachusetts and return all interest charges and fees it assessed against Massachusetts consumers.
Fees and interest owed to consumers in the amount of $35,000 have already been identified by Coakley's office, which is continuing to identify borrowers entitled to restitution. Additionally, FastBucks will pay Massachusetts $10,000.
Based in New Mexico, FastBucks offers small, short-term loans to consumers over the Internet and by telephone. The loans typically are for a few hundred dollars or less. These loans were required to be repaid within two to four weeks. The company secured repayment of the amount borrowed by using a consumer's bank account.
According to the settlement, unfair interest rates that sometimes exceeded 600 percent were charged by FastBucks. When consumers found themselves unable to repay the loan principal, fees and interest, FastBucks would extend the loans and add additional fees and charges to the consumer debt.
FastBuck's alleged excessive interest rates were in violation of state law, which stipulates that unlicensed lenders of small loans may only charge 12 percent interest.
"The inflated interest rates charged by payday lenders are unconscionable," Coakley said. "The loans offered by this company take advantage of Massachusetts residents in tough financial situations and further push them into a spiral of debt. Our office will continue to investigate and prosecute these types of unscrupulous business practices."
FastBucks, under terms of the settlement, is prohibited from selling high interest loans in Massachusetts and will not distribute promotional and marketing materials to Massachusetts consumers.
The company will also reimburse consumers for interest and fees charged on their loans, cease all collection efforts and request credit reporting agencies remove such transactions from consumer credit records.