Tuesday, September 21, 1999
AUSTIN - Texas Attorney General John Cornyn today announced that his office has secured temporary injunctions against "payday" lenders, EZ Cash and Quick Cash. These businesses have stores in the Rio Grande Valley.
"Businesses that break the law will not be tolerated, especially those that prey upon people most in need of help," said Attorney General Cornyn.
Payday loans are short term loans made by unlicenced lenders for up to several hundred dollars at extremely high interest rates ranging from 650% to 860% APR. Payday loan businesses usually lend to low income consumers who face short-term money problems, live paycheck-to-paycheck or do not have access to mainstream forms of credit. Although they lend small sums - usually $100 to $500 - these lenders charge fees that add up to an excessively high annual percentage rate.
Attorney General Cornyn alleged that these "payday" lenders were making usurious loans and violating the Deceptive Trade Practices Act, the Texas Debt Collection Act, and the Texas Credit Title. Texas law caps the interest rate that may be charged on small short-term loans at 10%, unless made by a licensed lender. Neither of the businesses named today are licensed lenders.
The temporary injunction was issued by Judge Leticia Hinojosa. The temporary injunction will enjoin defendants from making consumer loans or engaging in the business of making deferred presentment transactions.
The Attorney General had filed suit against these businesses on May 12, 1999. These lawsuits were filed at the request of Consumer Credit Commissioner Leslie L. Pettijohn. The EZ Cash and Quick Cash lawsuits were filed in Hidalgo County District Court and are being handled by Assistant Attorneys General Ric Madrigal and Tracey Whitley of the McAllen Office of the Consumer Protection Division.
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