New York Prosecutors Charge Payday Lenders With Usury

The New York Times has the story: New York Prosecutors Charge Payday Lenders With Usury

"A trail of money that began with triple-digit loans to troubled New Yorkers and wound through companies owned by a former used-car salesman in Tennessee led New York prosecutors on a yearlong hunt through the shadowy world of payday lending.

On Monday, that investigation culminated with state prosecutors in Manhattan bringing criminal charges against a dozen companies and their owner, Carey Vaughn Brown, accusing them of enabling payday loans that flouted the state’s limits on interest rates in loans to New Yorkers.

Such charges are rare. The case is a harbinger of others that may be brought to rein in payday lenders that offer quick cash, backed by borrowers’ paychecks, to people desperate for money, according to several people with knowledge of the investigations.

“The exploitative practices — including exorbitant interest rates and automatic payments from borrowers’ bank accounts, as charged in the indictment — are sadly typical of this industry as a whole,” Cyrus R. Vance Jr., the Manhattan district attorney, said on Monday.

...

"The indictment offers a detailed look at the mechanics of the multibillion-dollar payday loan industry, which offers short-term loans with interest rates that can soar beyond 500 percent. ...

The payday lending operation began when borrowers applied for loans on websites like MyCashNow.com. From there, borrowers’ information was passed to another company, owned by Mr. Brown, that originated the loans. The information then wound up with another company, owned by Mr. Brown, that collected payments from borrowers."

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Here are some previous posts on payday loans.