Payday lender ordered to reimburse borrowers $32M
State District Court Judge Francis Mathew of Santa Fe has ordered a payday loan company to reimburse consumers $32 million for illegal business practices.
The order against FastBucks comes four years after a finding by Judge Michael Vigil that the business violated lending laws in New Mexico.
“Tens of thousands of consumers were victimized by FastBucks,” said P. Cholla Khoury, director of consumer protection for Attorney General Hector Balderas. She said the case focuses on loans written between 2006 until late in 2012 when Vigil’s ruling made the firm change some of its practices.
The case was brought by former Attorney General Gary King, who left office two years ago.
A plan to reimburse FastBucks customers still needs to be approved by Mathew within 90 days, and then there would be a formal notification to the customers.
The company can appeal. Donald Kochersberger, an attorney for FastBucks with Business Law Southwest, was out of the office Wednesday and could not be reached for comment.
Meantime, Khoury said people who think they might be entitled to a refund should contact the Attorney General’s Office.
“This $32 million restitution judgment for New Mexico consumers is a great step toward eliminating predatory business practices that prey on New Mexico families,” Attorney General Balderas said Wednesday. “Our office is working expeditiously on a plan for New Mexico consumers to receive their restitution. However, we are asking for consumers’ patience as we work through the legal process to get them what they are owed.”
Khoury said the case stems from a 2007 change made by the state Legislature that capped the costs of so-called payday loans to $15.50 per $100.
The state court found that, after enactment of the legislative reform, the company fashioned its loans and business practices so as to circumvent regulation of payday loans. “These business practices avoided many of the benefits to borrowers that would have otherwise been available,” Balderas said.
Khoury said FastBucks charged “outrageous” interest on loans that should have been capped under the payday loan statute.
“It is clear from the context of the testimony that the defendants were not allowing borrowers to pay off their loans when they were able to,” Mathews wrote in his opinion issued Tuesday in Santa Fe.
According to the 2012 court finding, one employee testified that, “We just basically don’t let anybody pay off [a loan]. … We tell them how their tax refund is better used at Wal-Mart … than at FastBucks, and we basically talk them into making a payment and continuing to be our customer.”
FastBucks is a private lending company based in Dallas and has been in business since 1997.
According to a profile of the firm on LinkedIn, FastBucks has 60 retail locations in New Mexico and five other states and has been named one of the fastest-growing private companies.
Consumers who believe they were victims of predatory business practices should contact the attorney general’s Consumer Protection Division toll-free number, 844-255-9210.