People of the State of California, acting by and through City Attorney Dennis J. Herrera v. Check 'N Go of California Inc. dba Check 'N Go; Southwestern & Pacific Specialty Finance Inc. dba Check 'N Go; Avante Teladvance Inc. dba Check 'N Go Online; Monetary Management of California Inc. dba Money Mart; Money Mart Express Inc. dba Customcash Online
Published: Dec. 17, 2011 | Result Date: Oct. 19, 2011 | Filing Date: Jan. 1, 1900 |Case number: CGC-07-462779 Settlement – Equitable Settlement
Court
San Francisco Superior
Attorneys
Plaintiff
Owen J. Clements
(Office of the San Francisco City Attorney)
Dennis J. Herrera
(San Francisco Public Utilities Commission)
Kristine A. Poplawski
(Office of the San Francisco City Attorney)
Peter J. Keith
(Office of the San Francisco City Attorney)
Robert A. Bonta
(Office of the Attorney General)
Christine B. Van Aken
(Office of the San Francisco City Attorney)
Defendant
Robert H. Bunzel
(Bartko LLP)
Facts
City Attorney Dennis Herrera filed a lawsuit on behalf of California consumers against the defendants including Check 'N Go of California Inc., Southwestern & Pacific Specialty Finance Inc., Money Mart Express Inc. and several other storefront payday lenders for unfair and fraudulent business practices.
Contentions
PLAINTIFF'S CONTENTIONS:
Plaintiff contended that defendants, storefront payday lenders, targeted low-income and working class families that lived from paycheck to paycheck by offering oversized loans with annual percentage rates exceeding 400 percent.
DEFENDANTS' CONTENTIONS:
The defendants contended that their loan fees and rates were consistent with California payday lending requirements, served the needs of consumers who otherwise would not have had access to traditional banking institutions, and were authorized to offer such loans by federal and/or California law.
Result
Certain companies in the case agreed to settle the matter by providing a restitution fund to eligible customers of up to $7.5 million. Money Mart was also required to forgive $8 million in other debt owed by California consumers. Money Mart was further prohibited from affiliating with out-of-state banks to make similar loans. It was required to pay $875,000 to the City and County of San Francisco.
Other Information
In a separate lawsuit filed by Herrera, a settlement with National Arbitration Forum Inc. (NAF) was also reached. Until 2009, NAF and its affiliates were the go-to arbitration providers for credit card companies attempting to collect on debts. It was secretly partly owned by a hedge fund that was owned by one of the companies that used NAF to collect on debts. NAF was prohibited from ever arbitrating any debt collection cases in the state. It was prohibited from arbitrating employment disputes for three years. NAF will pay the city and county $1 million also as part of the settlement. FILING DATE: April 26, 2007.
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