DENVER – Attorney General John Suthers announced today that Quik Payday, Inc., of Logan, Utah, will pay $2 million in restitution to Colorado consumers for making illegal “payday” loans via the Internet in violation of Colorado law. The Attorney General estimates some 15,000 Colorado consumers will share in the settlement.
“Thousands of Colorado consumers have been victims of payday lenders that operate over the Internet and fail to comply with Colorado law,” said Suthers. “Colorado has placed very clear restrictions on payday loans in recognition of the vulnerability of these borrowers, and I will not allow Internet lenders to ignore our state’s laws.”
In January 2005, the Attorney General’s office began an investigation into Quik Payday’s activities. The investigation revealed that, beginning some time in 2000, Quik Payday made payday loans to Colorado consumers over the Internet. Quik Payday, however, was not licensed in Colorado and its loans failed to comply with other state laws regarding payday loans.
Colorado law generally requires lenders who make loans with annual percentage rates (APRs) in excess of 12% to have a license. Further, Colorado’s payday loan law limits the finance charges a lender can charge, and prohibits a lender from renewing a loan more than one time. Since Quik Payday was not licensed in Colorado, it was not authorized to make payday loans. Some of its loans also exceeded the maximum finance charges allowed by Colorado’s payday loan law. For example, Colorado law limits the finance charge on a $500 loan to $75, but Quik Payday charged $100 on such loans. Quik Payday also renewed its loans more than the one time Colorado’s law allows.
Under the terms of the settlement, Quik Payday will pay $2 million in refunds and other charges to Colorado consumers who obtained loans from Quik Payday. Quik Payday is to pay the refunds directly to the affected consumers, and is to do so over the next 30 days. Quik Payday also agreed not to make any payday loans in Colorado without a license.
Currently, 583 payday lenders are licensed in Colorado. This represents approximately 125 companies, as each branch office of a company is required to have its own license.
Consumers with complaints regarding payday lenders may call the Colorado Attorney General’s Office at (303) 866-4494 or may download a complaint form from: http://www.ago.state.co.us/UCCC/PDF/uccccmpplform.pdf