2 lending firms accused of scamming Minnesota residents
ST. PAUL, Minn. (AP) — Minnesota’s attorney general is suing two lending firms accused of scamming veterans and senior citizens.
The lawsuit alleges the firms pressured people to sign over large amounts of their monthly pension payments in exchange for small loans. Some of the pension advances charged annual percentage rates of 200 percent for as long as 10 years.
“It’s a very expensive way to borrow money, and it usually puts people even further into debt,” Attorney General Lori Swanson said.
The lawsuit was filed against Delaware-based Future Income Payments and a Nevada company named FIP, though both companies have the same Nevada address. A company spokesman declined comment.
Multiple state and federal investigations are looking into the companies’ practices. In Minnesota, Commerce Commissioner Mike Rothman said the department is investigation at least 100 cases.
Disabled veteran Stephen Schmelz called the companies “snakes in the grass.”
He said he was charged $27,000 for a $2,700 loan he was using to pay off medical bills from spinal surgeries. The $450 monthly payments would have been a quarter of his VA disability payment.
“They know that we need the money desperately, they know that we have a fixed income, and they know that that’s going to be a direct payment every month,” Schmelz said.
The lawsuit alleges the companies issued loans without a license and falsely labeled the transactions as purchase agreements, not loans. The suit seeks to stop the alleged practices, win restitution for those who have paid the interest on the loans and nullify current loans.