The Cuomo administration has told 35 online companies to cease and desist offering illegal payday loans to New York consumers.
The state Department of Financial Services said an investigation found the companies were offering the short-term loans to struggling families and charging remarkably high interest rates, with none of the payments going to pay down the principals on the loans.
Benjamin Lawsky, the agency’s superintendent, sent letters to 117 banks and the National Automated Clearing House Association to request they stop access to New York customers’ accounts for the risky loans.
“Illegal payday lenders swoop in and prey on struggling families when they’re at their most vulnerable – hitting them with sky-high interests rates and hidden fees,” said Gov. Andrew Cuomo in a statement. “We’ll continue to do everything we can to stamp out these pernicious loans that hurt New York consumers.”
Lawsky said his office said letters to the debt-collection companies in New York to not collect on illegal payday loans from the 35 companies.
The loans, Lawsky said, are short-term, small loans that are timed to customers’ paychecks. He said the loans are illegal in New York, but companies are offering the loans over the Internet to skirt state law.
Here’s Lawsky’s letter that details the companies being targeted.