by Max Brantley
I have some GREAT news…CashMax has closed – see attached pictures. CashMax Loan Services the installment payday lenders, using the Credit Services Organization scheme, closed their store today, Thursday, April 27, 2017.UPDATE: On a related note, a federal agency announced action against online lenders charging rates in excess of Arkansas limits to Arkansas customers.
Shortly after Senator Jason Rapert’s SB658 was approved by the House and Senate and sent to the Governor for his signature on March 30, 2017, I called the CashMax store in Hope, Arkansas, and inquired about the process to obtain a $400 loan. I was told that they were no longer making new loans or refinancing existing loans due to the Arkansas Legislature.
I then called the North Little Rock office of CashMax and received the same story. Additionally I was told that their lender (NCP Finance, Dayton, Ohio) had told them to stop processing new loans due to the actions by the state legislature. When I asked when they had stopped the timeframe I was given tied to April 5, 2017, the day Act 944 officially became law in Arkansas.
There has been a sign in the window for more than three weeks with new hours and only one car parked out front during open hours. It appeared that they laid off one of their two employees and cut their hours to 40 hours a week. The single employee working for the past three weeks I assume has been collecting payments from the unsuspecting borrowers, although I believe these loans had been illegal due to their 280.82% interest rates.
However, we have been unable to get Attorney General Lesley Rutledge to give a ruling as to the legality of these loans that exceed our state usury rate by sixteen times.
The Consumer Financial Protection Bureau (CFPB) yesterday took action against four tribally affiliated online payday installment lenders for deceiving Arkansas consumers and collecting debt that was not legally owed because the lenders exceeded Arkansas’ interest rate cap. Under Arkansas law, the illegal loans were void and could not be collected.
The CFPB charged that four online lenders – Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc. – made $300 to $1200 long-term payday installment loans with annual percentage rates (APRs) from 440% to 950%. The Arkansas Constitution caps interest at 17% per year.
“High-cost loans, whether short-term payday loans or long-term payday loans, put people in a cycle of debt. The Consumer Financial Protection Bureau is defending Arkansas families against predatory lenders,” said Hank Klein, with Arkansans Against Abusive Lending.
All of the lenders are owned and incorporated by the Habematolel Pomo of Upper Lake Indian Tribe located in Upper Lake, California. The lenders claimed that only tribal law, not state law, applied to the loans. However, in 2014, the Supreme Court made clear that tribes “’going beyond reservation boundaries’ are subject to any generally applicable state law.” The loans to Arkansas borrowers were not made on the California reservation. “The Arkansas Constitution protects families against predatory lending, and lenders can’t get around the Constitution by hiding behind a tribe,” said Lauren Saunders, associate director of the National Consumer Law Center.
The CFPB alleges that the four lenders made electronic withdrawals from consumers’ bank accounts or called or sent letters to consumers demanding payment for debts that consumers were under no legal obligation to pay, violating not only Arkansas law but also the federal law against unfair, deceptive and abusive practices. The CFPB is the consumer watchdog that was created in 2010 after the financial crisis to protect American consumers from unscrupulous financial practices.