NC ATTORNEY GENERAL PROTECTS CONSUMERS FROM PREDATORY LOANS

North Carolina Attorney General Josh Stein recently announced that the Department of Justice has resolved a lawsuit against predatory auto title lenders in North Carolina. Liquidation, LLC made illegal loans to more than 700 North Carolinians under many names and charged interest rates of 161 percent to 571 percent, which far exceed legal limits in North Carolina. Loan amounts ranged from $800 to $7,000.

“Law-breaking lenders can wreak havoc on a person’s credit and cause financially-strapped people to get even further behind,” said AG Stein. “My office will not allow predatory lenders to take advantage of consumers in this state. Companies that attempt to charge loan shark interest rates will be shut down.”

The defendants solicited the loans online, after which they asked people to send the defendants their vehicle title to secure the loan. If people failed to make a payment, the defendants repossessed the borrower’s vehicle. The defendants were not licensed to make loans in North Carolina and often failed to disclose all of the loan terms until after the borrowers agreed to the loans.

The NC Department of Justice obtained a temporary restraining order and preliminary injunction order against Liquidation, LLC, also known as Auto Loans, LLC, Car Loan, LLC, and Sovereign Lending Solutions, LLC in 2016. After the defendants failed to appear in court, the NCDOJ traced their bank accounts to secure restitution funds and successfully froze $178,000.

The Court’s final judgment provides that:
· Loans made by the defendants are void and cancelled;
· Defendants are permanently prohibited from engaging in loan business in North Carolina;
· The $178,000 in frozen funds will be transferred to NCDOJ for consumer restitution and consumer protection purposes;
· Defendants liens are cancelled;
· Consumers who still have their vehicles can receive a new title without the lien;
· And a civil penalty of $3.5 million will be entered against the default defendants.

Two former employees also entered a consent judgment in which they agreed to permanent injunctions and substantial money judgments unless they collectively pay $15,000 to NCDOJ for consumer restitution.
###

FTC Brings Suit Against North Carolina Debt Collector for “Phantom Debts”

On June 23, 2017, the Federal Trade Commission (FTC) announced that it has filed a complaint in the U.S. District Court for the Western District of North Carolina against a North Carolina debt collection company and its owner, alleging that the defendants took money from consumers for fake or “phantom” debts they did not owe.

According to the FTC, the defendants bought counterfeit payday loan debts from a lending company through a debt broker and began collecting on the debts. When consumers began complaining that they never took out the payday loans, or that they did not have an outstanding balance, the defendants reported the complaints to the broker, who then provided the defendants with a full refund for their purchase. Per the Complaint, the defendants kept collecting on the debts for more than seven months despite their knowledge that the debts were phony.

As a result of the alleged actions, defendants are charged with violating section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibiting unfair and deceptive acts or practices, and section 814 of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692l, prohibiting the use of false or deceptive means in collecting debt. The FTC seeks both immediate

NC ATTORNEY GENERAL SPEAKS OUT ON BEHALF OF STUDENT LOAN BORROWERS

Earlier this month, the U.S. Department of Education announced that it will delay important new rules that protect student loan borrowers from predatory and deceptive practices.

North Carolina Attorney General Josh Stein released the following statement in response:

“Education is one of the best reasons I can think of to borrow money. But unfortunately, there are some in our world who take advantage of those who are vulnerable – and that includes student borrowers. As North Carolina’s Attorney General, protecting people, including students is my top priority.

“That is why I find this news deeply troubling. The rules, which were to take effect on July 1, would protect student borrowers – delaying them is misguided and irresponsible.

“These delayed rules were hard-fought and sound consumer protection measures born out of the problems that other attorneys general and I have seen plague student borrowers time and time again.”

The delayed protections include:

  • Prohibiting schools from forcing students to pursue complaints in arbitration rather than in court;
  • Prohibiting schools from requiring students to waive participation in class action lawsuits; and
  • Providing automatic relief and group relief for defrauded federal student loan borrowers in certain circumstances, including following legal actions by state attorneys general.

NCLC Calls on Congress to Restore Federal Protections Against Abusive Debt Collection

Contact us at Vujovic Law to see how we can help stop the abusive creditor tactics described in the recent U.S. Supreme Court decision described below:

In a decision authored by Justice Neil Gorsuch, the Supreme Court ruled in Henson v. Santander Consumer USA, Inc. that the Fair Debt Collection Practices Act (FDCPA)—the key federal law that prohibits late night debt collection calls, threats, harassment of neighbors, and contacts after the consumer tells the debt collector to stop—did not apply to Santander. Because Santander was collecting debts it bought from a different lender, the Supreme Court held that it did not qualify under one of the FDCPA’s definitions of debt collector, which covers companies that regularly collect debts owed or due another.

“The Supreme Court did not address a separate definition of debt collector that looks at whether the company’s principal purpose is debt collection,” clarified National Consumer Law Center (NCLC) staff attorney April Kuehnhoff. “Debt buyers are still covered under the FDCPA if they meet the principal purpose test,” she added.

“Today’s decision is bound to lead to consumer confusion since consumers won’t know whether or not the FDCPA protections apply to the debt buyer contacting them,” said NCLC attorney Margot Saunders. “The FDCPA is a 40-year-old law written before the rise of the modern debt buying industry. To ensure that consumers are fully protected from abusive debt collection activities, the onus is now clearly on Congress to amend the FDCPA to clarify that all debt buyers are debt collectors covered by the statute. This will not only protect consumers but also prevent a race to the bottom as debt buyers move to restructure their companies in an attempt to avoid having to comply with federal consumer protection statutes.”