Tonawanda News — Attorney General Eric Schneiderman announced that his office has reached a settlement with five companies, including one in Kenmore, that were collecting illegal payday loans from customers.
Payday loans, which violate the state’s usury and lender laws, are short-term and generally have annual rates of interest between 100 and 650 percent. New York law only allows interest rates of 16 percent for lenders not licensed by the state.
Most consumers cannot pay off the loan when it comes due, and must extend the payment period by adding additional interest putting them in debt indefinitely.
Under the settlement, the five companies will pay a total of $279,605.98 in restitution and $29,605 in penalties. All of the companies will be prohibited from collecting pay day loans in the future.
V&R Recovery, Inc., doing business as Alexander & Stefano at 3411 Delaware Ave., in Kenmore, is one of the companies included in the settlement. The other four companies involved in the settlement are: RJA Capital, Inc., of Ellicott Street, Buffalo, Westwood Asset Management, LLC, of Delaware Avenue, Buffalo, Erie Mitigation Group, LLC, of California Road, Orchard Park and Northern Resolution Group, of John James Audubon Parkway, Amherst.
‘‘Payday loans trap thousands of New Yorkers in a cycle of debt and prey on vulnerable consumers, all for the financial benefit of debt collectors. Unfortunately for those companies, payday loans are also illegal, and my office will continue to crack down on an industry that exploits desperate consumers across our state,” Schneiderman said in a statement released Monday.