An Internet-based payday lender that sold high-interest loans to consumers in Massachusetts at up to 600% interest will no longer be able to do business in the state under a settlement filed by the state's attorney general's office.
The settlement also requires the lender, FastBucks, to return all interest charges and fees that it assessed against consumers on their loans, cease all collection efforts and request credit-reporting agencies to remove these transactions from consumer credit records. Attorney General Martha Coakley's office already has identified $35,000 in fees and interest owed to consumers - and is continuing to work to identify borrowers who are entitled to restitution. FastBucks also must pay $10,000 to Massachusetts.
FastBucks, based in New Mexico, offers small, short-term loans to consumers via the Internet and by telephone. The loans, generally granted for a few hundred dollars or less, must be repaid within two to four weeks and uses consumer bank accounts to secure repayment of the amount borrowed.
According to the settlement, FastBucks charged an unfair interest rate that sometimes exceeded 600%. When consumers were unable to repay the loan principal, fees and interest, FastBucks extended the loans and added fees and charges to the consumers' debt. The excessive interest rates charged by FastBucks violate state law that stipulates unlicensed lenders of small loans may only charge 12% interest.
“The inflated interest rates charged by payday lenders are unconscionable,” said Coakley, in a statement. “The loans offered by this company take advantage of Massachusetts residents in tough financial situations and further push them into a spiral of debt. Our office will continue to investigate and prosecute these types of unscrupulous business practices.”