California AG slams payday lender

[Shawnee]

August 1, 2006

 

FOR IMMEDIATE RELEASE

(916) 324-5500

 

(PASADENA) – Attorney General Bill Lockyer today filed a $2 million-plus lawsuit against Los Angeles County-based Fast Cash for violating a state law that prohibits payday loan businesses from suing for triple the amount of the check when customers’ bank accounts do not hold sufficient funds to honor post-dated checks written to secure the loan.

 

“Fast Cash extorted outrageous amounts of money from its customers,†said Lockyer. “They threatened lawsuits, tried to squeeze settlements, and, when that did not work, they deceived the court into a rendering a judgment. Fast Cash could have made a lawful living. Instead, they chose fear and deceit. We will continue ridding this industry of similar frauds.â€

 

The complaint, filed in Los Angeles County Superior Court, asks the court to permanently enjoin the business from further violating the law, void improperly obtained judgments, order full restitution to victims, and assess a civil penalty of not less than $2 million for unlawful business practices. Fast Cash may have accumulated improper judgements in excess of $350,000.

 

In most cases, state law authorizes a plaintiff to seek a penalty of treble damages, or three times the amount, against a person who writes a bad check. However, California law prohibits payday loan operations from collecting such damages, instead limiting them to the amount of the check and a single $15 fee. Further damages and fees are not allowed.

 

Pay day lenders are not entitled to treble damages because, unlike checks for goods or services, at the time a pay day loan is written both parties understand the borrower’s bank account often will not contain sufficient funds to honor the check. Therefore, the law only allows lenders a single late fee of $15 rather than the punitive treble damages award.

 

The complaint alleges Fast Cash, run by defendant Christoph Hoppe, illegally sued more than 400 individuals from the Los Angeles area in Los Angeles County Small Claims Court for treble damages for checks passed on insufficient funds. Defendants threatened borrowers with a suit in order to obtain their agreement to pay back the loan plus treble damages. When the defendants could not secure an agreement, Hoppe pursued the action in court but would not reveal that each of these checks was written pursuant to a payday loan transaction, according to the complaint.

 

The vast majority of borrowers, the complaint alleges, did not attend the small claims court hearings to inform the court of the nature of the transaction. Without complete information, the court ordered borrowers to pay treble damages, according to court records.

 

The complaint states that Hoppe used “unfair, fraudulent, unconscionable and unlawful means to collect or attempt to collect consumer debts.â€

 

Since being investigated the company appears to have stopped making payday loans.

 

Attachments for this Release

 

Fast Cash Complaint - Final.pdf - Fast Cash Complaint [22 KB, 7 pages]

 

http://ag.ca.gov/newsalerts/release.php?id=1327

[stu]

Im glad someone is finally sticking it to the sharks that prey on people in trouble!

[hoapres]

Although it would have been nice for at least one of the small claims commissioners to have realized that payday loans were not subject to the treble damage provisions. Although, perhaps one of the small claims court commissioners passed it on to the AG.

 

No doubt most defaulters on payday loans don't show up for the small claims court hearings. One payday lender regularly clogs up the small claims court calendar in my jurisidiction.

[Guest mic]

I am glad to the see that this company is being held accountable.

[mike2153]

good for them con artists anyways should have shut them down

[hoapres]

The Fast Cash cited by the California AG does not appear to be the Fast Cash, Inc. of Northern California.

 

I am not defending payday lenders but merely to clarify matters.

[GEORGE]

L.S.A. DOES NOT APPROVE OF PAY DAY LOANS

 

(LOAN SHARKS of AMERICA)

 

EVEN FOR THEIR NON PERFORMING ACCOUNTS

 

(EVEN L.S.A. HAS IT'S STANDARDS)