Attorney General Coakley Bars FastBucks From Continuing its Payday Lender Business in Massachusetts
AG obtains refunds for consumers from lender that was making loans at up to 600% interest
The settlement prevents payday lender FastBucks from offering its high interest "payday" loans to Massachusetts consumers, and requires FastBucks to return all interest charges and fees that it assessed against Massachusetts consumers. The Attorney General's Office has already identified $35,000 in fees and interest owed to consumers, and is continuing to work to identify borrowers entitled to restitution. FastBucks will also pay $10,000 to the Commonwealth.
FastBucks, a New Mexico based lender, offers small, short-term loans (known as "payday" loans) to consumers via the Internet and by telephone. The loans, generally granted for a few hundred dollars or less, must be repaid within two to four weeks and used consumers' bank accounts to secure repayment of the amount borrowed. According to the settlement, FastBucks charged an unfair interest rate on these loans, which sometimes exceeded 600%. When consumers were unable to repay the loan principal, fees, and interest, FastBucks extended the loans, and added additional fees and charges to the consumer debt. The excessive interest rates charged by FastBucks are in violation of state law which stipulates that unlicensed lenders of small loans may only charge 12% interest.
"The inflated interest rates charged by payday lenders are unconscionable," said Attorney General Martha Coakley. "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."
Under the terms of the settlement, FastBucks is prohibited from selling high interest loans in Massachusetts, and will not distribute promotional and marketing materials to Massachusetts consumers. FastBucks will also reimburse consumers for all interest and fees charged on their loans, cease all collection efforts, and request credit reporting agencies to remove these transactions from consumer credit records.
Today's agreement is part of an ongoing investigation by the Attorney General's Office into payday lenders who are making illegal loans over the Internet to Massachusetts consumers. Consumers who have a complaint or concern with an Internet payday lender are encouraged to contact the Attorney General's Insurance and Financial Division at (888)-830-6277.
This matter is being handled by Assistant Attorney General Amy Gwiazda and Legal Analyst Sarah Bookbinder of Attorney General Martha Coakley's Insurance and Financial Services Division with assistance from Investigator William Mackay of the Investigations Division.