Payday Loan Borrowers Hit with 800% Rates to Get Compensated

Payday Loan Borrowers Hit with 800% Rates to Get CompensatedThis is the kind of payday loan abuse — via sky-high interest rates — that U.S. regulators have been targeting.
After three years in court, at least some 400 Montana consumers who took out Internet payday loans from LoanPoint USA will have their loans forgiven and many will share a $233,000 settlement.
The loans carried exorbitant interest rates, the Billings Gazette reports.
Geneva Roth Ventures, Inc., which does business under the name LoanPoint USA, was making the loans without being registered to do business in Montana.
The case goes back to 2011 when Tiffany Kelker, of Billings, filed a lawsuit over her $500 Internet loan. During a six-month period, she paid more than $2,100 to LoanPoint, but still owed the original $500 principal.
Kelker was the lead plaintiff in the class action suit after she paid 800 to 1,000 percent interest, said Billings attorney John Heenan, of the Bishop Heenan law firm. Montana law caps interest rates at 36 percent.
Heenan and co-counsel assistant attorney general Chuck Munson, of Helena, presented the settlement Wednesday to Yellowstone County Judge Russell Fagg, who approved the deal.
“We’re both really proud that real money will go out to these people,” Heenan said. “This is an important restriction against high-interest payday lenders.”
Such stories are common in the payday lending industry, which offers quick cash to those who can least afford the high fees that come with these short-term loans. These borrowers often get caught up in a cycle of debt from which they cannot escape.
Montana is one of just 15 states that effectively bans payday lenders from their state through anti-usury laws. Interest rates are capped  interest rates far below the effective triple-digit rates that the industry counts on for its profits.

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