State Reaches Agreement With Payday Loan Company

The company must refund $400,000 to about 5,000 Indiana customers for allegedly operating without a small loan company license and charging higher than allowed fees. Cash-Connects.com once operated payday loan businesses in Bloomington, Indianapolis, Kokomo, Lafayette, and Lebanon. Customers will be notified by mail if they are eligible to receive refunds.

Source: Inside INdiana Business

Attorney General Press Release

Indianapolis - Indiana Attorney General Steve Carter announced an agreement which requires payday loan company, Cash-Connects.com, to refund its consumers a total of $400,000 for allegedly charging higher than allowed fees and operating without a small loan company license.

"Customers of Cash-Connects visited the business because they temporarily needed financial assistance," Attorney General Steve Carter said. "This agreement is aimed at providing relief to those individuals whose vulnerability was exploited."

Cash-Connects.com formerly operated payday loan businesses in Bloomington, Indianapolis, Kokomo, Lafayette, and Lebanon, and estimates that approximately 5,000 Indiana customers could be eligible for refunds. Cash-Connects.com will notify customers who had contracts within 90 days if they are eligible for refunds by mail at the consumers last known address. Refund amounts will be calculated through a formula based upon loan values and payments made on the loan.

In October 2003, Attorney General Carter, on behalf of the Indiana Department of Financial Institutions (DFI), filed motions for preliminary injunctions against Cash-Connects.com and eight other payday lenders, amid allegations of charging consumers with higher than allowed fees and operating without a small loan company license.

In March 2002, Indiana law established a maximum fee of $35 that loan companies could charge consumers for what are known as 'payday loans'. These loans typically range between $100 and $300 giving the customer emergency cash until their next paycheck. The consumer gives the company authorizations to draw that amount, plus charges, from their bank account.

Cash-Connects.com claimed to sell Internet access from their retail locations. Consumers became 'members' of the Internet service and received rebates of $200 or other amounts depending on their level of membership. The maximum cost to the consumer for the yearly Internet service membership for a $200 rebate could be as high as $1,460; a $300 rebate could cost as much as $2,190.

Following Carter's motions on behalf of DFI, payday lenders QuickNet, Cash Links, and Midwest Digital closed their doors. Court cases are pending against Planet Cash, MegaNet, American Cash and Short on Cash.

Cash-Connects.com has agreed to pay a $15,000 penalty in the event of future violations of the agreement, which has been filed in Monroe Circuit Court. The terms of the settlement do not require an admission of wrongdoing.

The Attorney General's Office has received 83 consumer complaints against Cash-Connects.com.

Customers who had contracts with Cash-Connects.com will be notified of the claim process through the mail. Those individuals who had contracts and who have moved since entering the contract can provide their information to the Attorney General for processing. That number to call is 1-800-382-5516.

Source: Inside INdiana Business