State AG Goes After Debt Collector for Payday Loans

Arkansas Attorney General Dustin McDaniel announced Monday that he has filed a lawsuit against a Kansas-based debt collection agency that has refused to fully answer two formal investigative requests regarding the agency’s practice of collecting on payday loans.

McDaniel said that his suit is seeking to compel National Credit Adjusters LLC of Hutchinson, Kan. to respond to his investigative inquiries. The suit also asks that the company be prohibited from collecting in Arkansas until it answers the inquiry.

The AG noted that the collection agency, in a very limited response, revealed that they are in the business of buying and attempting to collect on old payday loans taken out by Arkansas residents.

But payday lending is illegal in the state, as the Arkansas Constitution caps interest on consumer loans at 17 percent. The AG’s office in 2008 began a concerted effort to drive payday lenders out of the state.

“We have successfully stopped usurious storefront payday lending in this state, and to date we have also shut down more than 30 online payday lenders, yet the ripple effects from this illegal business continue to harm Arkansas consumers,” McDaniel said in a statement. “Our office will continue its effort to prohibit activities related to payday lending, whether it’s by pursuing online payday lenders or a company like this, which is trying to collect on debts that were illegal in the first place.”

Attempts to contact National Credit Adjusters were unsuccessful. But the company does have a notice on the Home page of its Web site noting that it is currently working with the FBI to resolve a “Pay Day Loan Collection Scam.” The company also has a prominent section for consumers to file complaints.