On March 28, the Massachusetts Attorney General (“AG”) announced that a lender agreed to resolve allegations that it made predatory and illegal loans to 85 Massachusetts pensioners and veterans.
The lender allegedly entered into contracts with consumers, whereby the lender provided loans ranging from $1,800 to $40,000. Every month, the lender then accessed the consumers’ bank accounts to deduct a portion of their pension payments. According to the AG, the lender charged interest rates often exceeding 100%, in violation of state civil and criminal usury laws, which limit interest rates to twelve percent (12%) for loans of $6,000 or less and twenty percent (20%) for loans over $6,000.
Pursuant to the assurance of discontinuance filed in Massachusetts state court, the lender agreed to convert its contracts with consumers into interest-free loans, and to refund overpayments made by any consumer who had already paid more than the principal balance borrowed. In total, the lender will provide $2 million in debt relief to consumers. The company is also prohibited from making any more allegedly illegal loans in Massachusetts.