A federal judge has temporarily halted the operations of an online payday lender at the request of the Consumer Financial Protection Bureau, which claims the company illegally deposited payday loans and withdrew millions of dollars in fees from consumer checking accounts.
The bureau said the Hydra Group used information bought from online lead generators to access consumers’ accounts, then used falsified loan documents to claim the consumers had agreed to phony online payday loans.
Federal authorities have asked a U.S. district judge to freeze the business activity and assets of a network of payday loan companies purportedly controlled by two local men.
The Federal Trade Commission earlier this month asked for injunctions against more than a dozen payday loan businesses controlled by two Johnson County men, Timothy A. Coppinger and Frampton T. Rowland III.
A 60-year-old Navy veteran needed money fast. So he did what far too many people do in that situation and applied for a short-term “payday-type” loan. When all was said and done, he was charged well over 100 percent interest. Seriously. One major player in the industry offered a $2,600, 47-month loan, and sought a total repayment of $20,280.03! That’s a 204.94 percent annual percentage rate!
Most of us realize that short-term lenders make their nut on exorbitantly high interest rates, but states have systematically cracked down on these companies and capped the interest they’re allowed to charge. State regulators have had a good deal of success in recent years securing hefty settlements for citizens victimized under state usury laws.