The AG's office accused FastBucks of making unconscionable loans to New Mexico residents.
FastBucks Made ‘Unconcionable’ loans
Lender was ‘not allowing’ borrowers to pay off debt
BY DENNIS DOMRZALSKI
A state court judge has ordered payday lender FastBucks to pay $32.2 million in restitution to New Mexicans for circumventing a state law designed to curb payday lending and putting customers into installment loans they couldn’t pay off.
The decision by state Court Judge Francis Mathew in Santa Fe ends a seven-year-old lawsuit which alleged that FastBucks changed its lending practices to skirt a 2007 state law designed to make payday lenders give customers a chance to pay off their loans over a 130-day period. Instead, FastBucks put many of its customers into installment loans “and were not allowing borrowers to pay off their loans when they were able to,” Mathew’s decision said.
It wasn’t immediately clear how many FastBucks customers would be affected by the decision.
The lawsuit against FastBucks was filed in 2009 by the New Mexico Attorney General’s Office. The AG’s office accused FastBucks of making unconscionable loans to New Mexico residents. In September 2012, then-state Court Judge Michael Vigil ruled that FastBucks had violated the state’s Unfair Practices Act and had kept customers locked into cycles of debt. But Vigil left the bench and the case was left sitting. Mathew took over the case in 2014 to determine how much restitution FastBucks should pay.
Current AG Hector Balderas said Tuesday’s decision was a “great step toward eliminating predatory business practices that prey on New Mexico families.”
He added: “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.”
The 2007 law requires payday lenders to offer consumers the opportunity to enter into an unsecured payment plan for any unpaid administrative fees and principal balance of the loan.
Installment loans are one of many types of short-term, high-interest loans that are lumped into the category of payday lending. Payday loans are typically very short-term unsecured loans, and yearly interest rates on them average in the 300 percent range.
In 2014, New Mexicans took out 274,453 high-interest loans for a total amount of $174.7 million. They paid $92.1 million in interest and fees on those loans, according to the New Mexico Financial Institutions Division.
During the 2015 legislative session in Santa Fe, payday loan opponents failed in an effort to get the state Legislature to cap payday loan interest rates a 36 percent.
People who think they might be owed money by FastBucks can call the AG’s office at 1-844-255-9210.
Dennis Domrzalski is an associate editor at ABQ Free Press. Reach him at email@example.com