Edelman & Combs Sues Payday Lenders
The Chicago law firm of Edelman & Combs has filed class action lawsuits against the following Indiana "payday loan" firms:
Cash In A Flash, Inc.
Check'N Go of Indiana, Inc.
Loans Til Payday, Inc.
Payday Today Incorporated
Speedy Check Cashers, Inc.
Four of the cases were filed in the federal district court in Hammond, Indiana. Speedy Check Cashers was sued in the federal district court in Chicago, where it is headquartered.
"Payday loans" are short tem, very high interest rate loans. The loans are typically two weeks in duration and carry annual percentage rates of 100% to over 1800%. The lender generally obtains a post-dated check as a means of repayment. At the end of the two week term, the customer has the option of continuing the loan for an additional period by paying the interest. The loans are typically "rolled over" on multiple occasions.
Generally, companies which make "payday loans" do not advertise the annual percentage rates. Instead, they advertise that the loans cost, e.g., $15 per $100. The consumer does not see the annual percentage rate until he or she is presented with the money.
"Payday loans" are generally made to consumers facing financial emergencies. Once a consumer obtains a "payday loan," he or she will often be unable to pay it off except from the proceeds of additional "payday loans." Often, the "payday loans" force the borrowers into unnecessary bankruptcies.
The lawsuits allege violation of the Truth in Lending Act and Indiana law.
Edelman & Combs concentrates in representation of consumers against lenders, car dealers, debt collectors, and other businesses.
June 22, 1999, Tuesday, PM cycle
SECTION: State and Regional
LENGTH: 363 words
HEADLINE: Payday loan companies in Indiana face lawsuits
DATELINE: HAMMOND, Ind.
BODY:
Attorney Daniel Edelman claims a group of Indiana payday loan firms are violating state and federal lending laws.
Stephen J. Schaller, general counsel for one of the loan firms in question, says Edelman is picking on a young industry.
The final decision will be made in federal district court in Hammond, where Edelman has filed lawsuits against four Indiana-based payday loan companies.
Edelman, of the Chicago-based firm Edelman & Combs, said Monday that the companies involved violated lending laws by not disclosing an annual percentage rate and by claiming a postdated check creates a security interest for a loan.
"The violations tend to be somewhat technical," he said. "We want to try to get people back some of these high interest rates they've been paying."
Payday loan firms, which have grown dramatically in number in Indiana and across the country in recent years, offer short-term loans in exchange for a postdated check and a fee. The maximum fee permitted in Indiana is $ 33 and loan amounts range from $ 50 to $ 200.
Indiana lenders had 15 of the stores with $ 12.7 million in business five years ago. As of last year there were 454 branches doing $ 287 million in business.
Problems can arise when customers renew loans multiple times and pile up hundreds of dollars in fees.
Edelman's firm has filed about 60 similar lawsuits in Illinois.
"Some have settled," he said. "In some cases we're winning rulings on the technical violations, in some cases we're losing them."
The companies involved in the lawsuits are Check-n-Go of Indiana Inc., Cash In a Flash Inc., Loans Til Payday Inc. and Payday Today Inc.
Schaller is general counsel for Check-n-Go of Indiana Inc. and Check-n-Go of Illinois Inc. He said the allegations in Edelman's lawsuit are the same as those brought against the company's Illinois division. The lawsuits in northern Illinois, he said, were rejected by a judge.
"Edelman has identified this industry as one that he views as vulnerable because it's in its infancy," Schaller said. "At this point, we're just trying to establish this product as a distinct financial service product. And we're having a lot of success."
Copyright 1999 The Indianapolis Newspapers, Inc.
THE INDIANAPOLIS NEWS
June 19, 1999 Saturday ALL EDITION
SECTION: BUSINESS; Pg. C01
LENGTH: 428 words
HEADLINE: Lawsuits targeting 4 payday lenders;
Suits that allege companies with state outlets have violated lending laws seek class-action status.
BYLINE: CHRIS O'MALLEY; STAFF WRITER
BODY:
Four payday loan firms that operate in Indiana are the target of lawsuits alleging they violated state and federal lending laws.
The outcome could potentially affect thousands of Hoosiers who obtained the short-term loans, for which customers write a post-dated check for an amount to be borrowed, plus a fee.
The maximum fee permitted in Indiana is $ 33. Loan amounts generally range from $ 50 to $ 200.
Among firms named in the lawsuits filed this week and last week in federal district court in Hammond, Ind., are Check'N Go of Indiana Inc., which operates several offices in Indianapolis.
Others named are Cash In a Flash Inc., Loans Til Payday Inc., and Payday Today Inc.
Among plaintiffs are two Gary residents who obtained loans from the payday lenders in northern Indiana.
The lawsuits allege that a customer's postdated check "does not create any sort of security interest" for the loan.
A customer's postdated check is commonly used by payday lenders to secure the loans.
The lawsuit against Loans Til Payday also alleges that it did not disclose conspicuously, as required under lending laws, the annual percentage rate equivalent of the short-term loans.
Officials from the Indiana Department of Financial Institutions, which regulates payday lenders, could not be reached for comment late Friday.
An attorney for Check'N Go, who had not yet seen the lawsuit, said the allegations sounded similar to those the same law firm brought against it in Illinois.
Those allegations of lending-law violations were dismissed by the court because the allegations were "really a reach," said Stephen J. Schaller, general counsel for Check'N Go.
The lawsuits seek class-action status on behalf of people who were customers of the lenders in the past year.
Customers potentially could be entitled to an amount twice what they paid in interest, according to an attorney at Edelman & Combs, the law firm representing customers.
The law firm said it has filed about 60 such lawsuits against payday lenders in Illinois, although it was not clear late Friday the status of those cases.
Payday lending has come under fire in Indiana, where the firms made more than $ 287 million in loans last year, up from $ 12.7 million in 1994.
State banking regulators unsuccessfully backed legislation this year that would have, among other things, limited the number of times a customer can renew a payday loan. Many customers get into trouble when they renew loans multiple times and rack up hundreds of dollars in fees.
Copyright 1999 The Indianapolis Newspapers, Inc.
THE INDIANAPOLIS STAR
June 19, 1999 Saturday ALL EDITION
SECTION: BUSINESS; Pg. C01
LENGTH: 428 words
HEADLINE: Lawsuits targeting 4 payday lenders;
Suits that allege companies with state outlets have violated lending laws seek class-action status.
BYLINE: CHRIS O'MALLEY; STAFF WRITER
BODY:
Four payday loan firms that operate in Indiana are the target of lawsuits alleging they violated state and federal lending laws.
The outcome could potentially affect thousands of Hoosiers who obtained the short-term loans, for which customers write a post-dated check for an amount to be borrowed, plus a fee.
The maximum fee permitted in Indiana is $ 33. Loan amounts generally range from $ 50 to $ 200.
Among firms named in the lawsuits filed this week and last week in federal district court in Hammond, Ind., are Check'N Go of Indiana Inc., which operates several offices in Indianapolis.
Others named are Cash In a Flash Inc., Loans Til Payday Inc., and Payday Today Inc.
Among plaintiffs are two Gary residents who obtained loans from the payday lenders in northern Indiana.
The lawsuits allege that a customer's postdated check "does not create any sort of security interest" for the loan.
A customer's postdated check is commonly used by payday lenders to secure the loans.
The lawsuit against Loans Til Payday also alleges that it did not disclose conspicuously, as required under lending laws, the annual percentage rate equivalent of the short-term loans.
Officials from the Indiana Department of Financial Institutions, which regulates payday lenders, could not be reached for comment late Friday.
An attorney for Check'N Go, who had not yet seen the lawsuit, said the allegations sounded similar to those the same law firm brought against it in Illinois.
Those allegations of lending-law violations were dismissed by the court because the allegations were "really a reach," said Stephen J. Schaller, general counsel for Check'N Go.
The lawsuits seek class-action status on behalf of people who were customers of the lenders in the past year.
Customers potentially could be entitled to an amount twice what they paid in interest, according to an attorney at Edelman & Combs, the law firm representing customers.
The law firm said it has filed about 60 such lawsuits against payday lenders in Illinois, although it was not clear late Friday the status of those cases.
Payday lending has come under fire in Indiana, where the firms made more than $ 287 million in loans last year, up from $ 12.7 million in 1994.
State banking regulators unsuccessfully backed legislation this year that would have, among other things, limited the number of times a customer can renew a payday loan. Many customers get into trouble when they renew loans multiple times and rack up hundreds of dollars in fees.
