The state Division of Banks has ordered a Nevada debt collector to stop collecting payments on more than 100 illegal loans made to Massachusetts residents.
Licensed Nevada debt collector Delbert Services Corp. and owner John P. Reddam also were ordered to refund to Bay State consumers all collection fees received in connection with the loans.
Delbert Services had payments on loans ranging from $850 to $5,075 that were made by five unlicensed and "predatory" Internet-based lenders, who also were told to cease loan activities in Massachusetts.
The loans were illegal under the state's small-loan statute because they included excessively high fees and interest rates that in some cases exceeded 150 percent. Any business that makes loans of up to $6,000 at an interest rate greater than 12 percent in Massachusetts also must be licensed as a small-loan company by the Division of Banks, and the maximum annual rate of interest for these loans is 23 percent.
The small-dollar, high-interest rate loans, which are similar to "payday" loans, primarily are offered to consumers through the Internet and require access to their bank accounts and personal information.
"We believe that these businesses knew that these predatory loans created serious injury to consumers by charging outrageous and illegal fees," Barbara Anthony, undersecretary of the state Office of Consumer Affairs and Business Regulation, which includes the Division of Banks, said in a statement. "The division uncovered evidence that Delbert was not only collecting on illegal loans, but they were collaborating with a network of predatory lenders that were making loans with annual interest rates ranging from 59 percent to 169 percent, and with origination fees as high as $500."
The five unlicensed Internet lenders also are being required to refund all interest, finance charges and fees collected from Massachusetts consumers on the illegal loans.
Those companies are Cash Call Inc. and subsidiary WS Funding LLC of Anaheim, Calif.; GP Investors LLC of Sicklerville, N.J.; Novea Resource Management LLC of Surfside, Fla.; and Western Sky Financial LLC of Timber Lake, S.D.
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