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DLLR News

 

DLLR Orders Unlicensed Lenders to Cease and Desist

 

Commissioner Reminds Consumers to Beware of Unlicensed Lenders

BALTIMORE (12/13/07) - Department of Labor, Licensing and Regulation Secretary Thomas E. Perez today announced that two out of state lending companies have been ordered to cease and desist offering payday loans in Maryland, an illegal practice in the State.

The companies, Arrowhead Investments Inc., of Missouri, and FFD Resources LLC, of New Mexico, were ordered on December 6, 2007 to stop offering payday lending services over the Internet to Marylanders after both companies failed to respond to earlier letters alerting them that the practice is illegal. Neither company is licensed to operate in Maryland, and both offered a type of consumer loan that violated state law.

"These companies broke the law not only by lending in the state without a license, but also by charging usurious interest rates for loans made to Maryland residents. Maryland will not tolerate this sort of activity," said Financial Regulation Commissioner Sarah Bloom Raskin. "I want to remind Marylanders that payday lending is illegal in the state. In addition, all loans made over the Internet require the lender making the loans to have a license before dealing with our consumers."

"Payday lending is predatory, and it was made illegal in order to protect Maryland consumers from unscrupulous practices. This should serve as a warning to other companies offering payday loans over the Internet," Secretary Perez said.

Actions against both companies were the result of consumer complaints. In each case, a consumer was charged exorbitant interest rates on a $300 loan. In the case of FFD Resources, the consumer was charged a finance charge of $37.50 and an Annual Percentage Rate of 1140.63 percent. Arrowhead Investments charged the consumer a finance charge of $90 and an Annual Percentage Rate of 782.14 percent.

Each company has 15 days to request a hearing on the matter. As a result of a hearing, or if either company fails to file for a hearing, the Cease and Desist order can be made final, and the company can be ordered to pay restitution or a penalty of up to $1,000, or both.

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