City Attorney Dennis Herrera sued Money Mart and the First Bank of Delaware for charging what his office calls “exorbitant and illegal” interest. “It is no coincidence that people are angry at Wall Street’s financial irresponsibility and its impact on average Americans living on Main Street,” Herrera said.
In the settlement, the City Attorney’s office was able to secure up to $7.5 million in restitution for customers. Money Mart is prohibited from using an out-of-state bank for its financing and will pay the city of San Francisco $875,000.
Herrera says that the payday loan company used the bank in Delaware to circumvent California’s interest rate and loan principal limits. In the settlement, Money Mart has agreed to stop using out-of-state banks for 30-months.
The suit dates back to 2007 when his office claimed the two entities were using unfair and fraudulent business practices. Jack Song, a spokesperson for Herrera, tells Digital News Report that these high interest loans targeted low-income and working class families living paycheck to paycheck.
“People are squeezed financially, and many are resorting to storefront lenders such as Money Mart,” Herrera said. “But some of these companies’ schemes are pushing individuals and families further in debt. I hope that today’s settlements send a strong message to other financial institutions to protect the interests of consumers.”
By: Mark Williams