LITTLE ROCK, AR - Attorney General Dustin McDaniel says that 14 businesses will close and pay a million dollars to settle lawsuits that accused them of offering illegal payday loans disguised as instant cash rebates for Internet service.
McDaniel announced the resolution of nine lawsuits with the payday lending firms, which will also stop trying to collect debts incurred through the rebates.
The businesses asked customers to set up three Internet accounts and were given a $100 rebate for each account they received. Customers were then required to pay $20 every two weeks for each account.
Under this agreement, a customer with three Internet accounts would pay $120 a month for dial-up Internet access. McDaniel said that the rebates were nothing more than a payday lending scheme that charged more than 500 percent personal interest.
The businesses agreeing to the settlement have operated under the names Dialing4Dollars.Net, JonesboroMoneyOnline.Net, CrossettCash.Net, ConwayCash.Net, Money.Net, EldoradoOnline.Net, MagnoliaMoney.Net and MoneyInAFlash.Net.
The businesses had 14 locations in Conway, Crossett, El Dorado, Jonesboro, Little Rock, Magnolia, Pine Bluff, Texarkana and West Memphis.
The settlement does not address other types of payday lenders, which are the subject of a lawsuit likely to end up before the state Supreme Court.