Payday loans--short-term, high-interest cash advances that often target low-income communities--are illegal in New York state. A 1976 law made it a felony to charge borrowers an interest rate above 25 percent. Because payday loans operate on quick lending cycles--usually two weeks--the annual interest rate climbs way above 100 percent, sometimes as high as 600 percent.
Gregory F. Maxwell via Wikipedia Commons
The state has been going after these lenders hard recently, with cease and desist letters and lawsuits. And on Monday Attorney General Eric Schneiderman announced that he had reached a settlement with five of them.
The five companies, all based in upstate New York, will pay a combined $$29,605.98 in fines, plus $279,605.98 in restitution.
If this song sounds familiar, it's because it's become the anthem of financial regulation: secure low settlement, proclaim victory.More »