State prosecutors in New York on Monday (Aug. 11) brought criminal charges against a dozen payment companies, “accusing them of enabling payday loans that flouted the state’s limits on interest rates in loans to New Yorkers,” according to a story in The New York Times.
“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,” the story quoted Manhattan District Attorney Cyrus R. Vance Jr. saying.
Among those indicted was Carey Vaughn Brown, who owned a dozen payday companies involved in an elaborate set of schemes designed to avoid financial limits. “Mr. Brown incorporated the online payday lending arm, MyCashNow.com, in the West Indies, a tactic that prosecutors say was intended to try to put the company beyond the reach of American authorities. Other subsidiaries, owned by Mr. Brown, were incorporated in states like Nevada, which were chosen for their light regulatory touch and modest corporate record-keeping requirements, prosecutors said,” according to The Times report.
It’s not typical for a prosecutor to breach the huge payday loan industry, where short-terms loans can deliver interest rates more than 500 percent, the story said.
