NYDFS Announces First Settlements to Provide Restitution to Consumers Affected by Alleged Unlawful Payday Lending Practices

Payday Lending Debt Buying NYDFS

The NYDFS recently announced that it entered into consent orders with two debt buyers, one based out of Kansas and the other out of Virginia. According to the Department, the debt buyers “improperly purchased and collected on illegal payday loans from New York consumers,” with the Kansas-based debt buyer allegedly attempting to collect on more than 7,000 payday loan debts of New York consumers and collecting payments on more than 4,000 of those debts between 2007 and 2014. The NYDFS’s press statement further alleges that the Kansas-based debt buyer repeatedly called New York consumers at work and at home, threatened to call consumers’ employers, and called family members to pressure consumers into paying their alleged payday loan debts. Pursuant to the consent order with the Kansas company, the debt buyer will (i) discharge more than $2.26 million in consumers’ payday loan debts; (ii) contact credit reporting bureaus and request that they remove any negative information that it previously provided associated with New Yorkers’ payday loan accounts; (iii) move to vacate judgments it obtained on New Yorkers’ payday loan accounts; and (iv) release pending garnishments, levies, liens, restraining notices, or attachments associated with judgments on New York consumers’ payday loan accounts. The Kansas debt buyer will issue almost $725,000 in refunds to more than 3,000 New Yorkers. The Virginia-based debt buyer will provide refunds totaling more than $66,000 to 52 New Yorkers allegedly affected by its lending practices, and discharge almost $53,000 in payday loan debts to 106 New Yorkers. The two settlements are the first NYDFS settlements to provide consumer restitution to New Yorkers affected by payday loans.