http://www.digitaljournal.com/article/340237

San Francisco City Attorney starts payday loan refund program Special

Posted Dec 31, 2012 by Jonathan Farrell
You have seen the commercials on TV, instant cash by way of a "payday loan," the major drawback with such offers is that the interest rates and fees are high.
Lombard Street in San Francisco
San Francisco, California: The rolling Lombard Street
Photo by paraflyer
And, for many people who are not familiar with banking practices the alluring sales pitch of these types of offers entraps them in next-to-impossible pay-back arrangements.
Dennis Herrera, CIty Attorney for San Francisco has been fighting these predatory lenders for some time trying to put a stop to the unscrupulous tactics some of these payday loan lenders use to pull unsuspecting customers into a web of debt.
On Dec. 27, two days after Christmas the City Attorney held a press conference to announce a three-month outreach effort targeting Check 'n Go borrowers in California whose online installment loans at exorbitant interest rates may entitle them to significant repayments for the interest, fees and finance charges they paid on their loans.
The 90-day refund program will end on March 28, 2013. The refund program is among the terms of an agreement Herrera negotiated with the payday lender in June to settle litigation filed by the City Attorney's Consumer Protection Unit on behalf of state consumers.
"The strongest statement we can make against predatory lending in California is to maximize restitution for every borrower who deserves it," "That's why this outreach push for eligible Check 'n Go borrowers is so important, said Herrera. "And it's why we intend to work so hard with community partners and elected leaders throughout California to make it a success."
In 2007 Herrera and his team took civil action alleging that the Cincinnati-based Check 'n Go engaged in an illicit "rent-a-bank" scheme aimed at skirting California's maximum allowable annual interest rate of no more than 36 percent for this type of loan.
On Dec. 27  San Francisco City Attorney Dennis Herrera announced that payday loan refunds will begin...
On Dec. 27, San Francisco City Attorney Dennis Herrera announced that payday loan refunds will begin to reimburse California consumers who were cheated by outrageously high interest rates and fees on simple loans based upon paycheck amounts.
Herrera's press office
Herrera's office noted that according to records obtained before and during the course of the litigation, Check 'n Go made online installment loans to California consumers with interest rates as high as 400 percent. this according to Herrera is far in excess of what state law allows.
"Under our settlement agreement, Check 'n Go has committed $4.3 million for refunds for eligible borrowers." "But, the City Attorney pointed out, they need only make a 'reasonable effort' to notify their borrowers."
"We know from experience that it often takes an extra effort to locate and fully educate eligible borrowers who may have moved, or who may reasonably ignore arcane legal notices from an unknown claims administrator," said Herrera. "We intend to work tirelessly over the next three months to get the word out to consumers about their rights, and to identify as many potential claimants as possible," he said.
While the appeal of a payday loan sounds simple, the fact that payday loan outlets are basically designed to make the most money off of a single transaction often leaves a consumer with little recourse. As reported this past summer of 2012, the California Dept. of Corporations also issued its media alert asking consumers to be wary not only of payday lender outlets but also of payday lender activities via The Internet.
Consumer advocate groups as well as lawmakers have faced what seems to be an continued increase in payday loan activities that undermine the ethics of good banking practices.
"We hope this outreach effort for Check 'n Go borrowers matches the success we saw with Money Mart/Loan Mart earlier this year," said Herrera. The average restitution payment obtained in the Money Mart/Loan Mart efforts was nearly $700.
This refund effort and the Money Mart/Loan Mart legal settlement, "together, they should send a strong message to financial institutions about the need to adhere to lawful lending practices in California," said Herrera.
Check 'n Go claimants may be qualified for restitution if they obtained a four-month installment loan online between Nov. 2006 and June 2008 through the web sites: checkngo.com, ilp.fbdel.com, and commandloans.com. To be eligible for repayment, borrowers must mail a claim form and a copy of the required form of identification to the settlement administrator, postmarked by March 28, 2013.
Herrera is urging potential claimants who think they may be qualified for restitution to visit, email or call for more information at the following:
* www.caloanrefund.org
* CALoanRefund@sfgov.org
* (Toll Free) 1-855-581-2350
The litigation involving the Check 'n Go loan settlement is: People of the State of California ex rel. Dennis Herrera v. Check N' Go of California, Inc., et al. (San Francisco Superior Court Case No. CGC-07-462779).