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A Nevada-licensed Internet payday lender agreed to stop making loans in New York according to a November 2004 agreement with Attorney General Eliot Spitzer. Cashback Payday Loans, Inc., based in Las Vegas, charged 650% APR for two week loans in a state with a 25% criminal usury law and a 16% civil usury cap. The consumer who complained to New York regulators paid $825 in interest on a $470 loan and was told she owed another $925. The Assurance of Discontinuance states “The Attorney General believes, by offering and making the above described ‘payday loans’ without a license to do so in New York State and by repeatedly and persistently making loans to New York consumers at interest rates that exceed twenty-five percent (25%) per year, Cashback has violated of GOL 5-501, Penal Law 190.40 and Executive Law 63(12).” Cashback did not admit violation of law in signing the agreement to stop making loans to New York consumers. Cashback is required to make restitution to every New York borrower for the difference between rates charged and New York’s civil 16% interest cap. Open loans and loans in collection will be null and void. In late November, Colorado’s consumer credit regulator issued cease and desist advisories to three Internet payday lenders believed to be offering deferred deposit loans in Colorado without complying with state law. The advisories warn lenders that failure to obtain a supervised lender’s license when required can trigger injunctions, refunds of all finance charges, and potential criminal liability. Companies warned by Colorado regulators include Preferred Cash Loans and Cash Advance, both of Carson City, Nevada; and Quik Payday Inc., located in Logan, Utah. Quik Payday charges $20 per $100 for loans up to $500, while Colorado’s deferred presentment law caps rates at 20% of the first $300 and 7.5% for loan amounts over $300 to $500.
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