PRESS RELEASE: Class action settlement provides $489 million in relief to victims of illegal internet payday lenders
Thursday, May 12th, 2022
After three years of extensive litigation, the settlement will provide relief to approximately 555,000 consumers who were subject to illegal practices by internet payday lenders.
FOR IMMEDIATE RELEASE: May 12, 2022
Richmond, VA – The federal court in Richmond today gave preliminary approval of a class action settlement that will provide $489 million of relief to victims of illegal internet loans. Internet payday lenders in this case preyed on Virginians and others nationwide, charging over 600% interest on loans. Those consumers, who number approximately 555,000, will now receive relief after more than three years of litigation on this issue.
The Virginia Poverty Law Center partnered with the law firms of Kelly Guzzo and Consumer Litigation Associates years ago to address the ongoing challenge of illegal payday loans. Today’s settlement is one of many that these law firms have obtained with illegal internet lenders over the past several years, including a $433 million settlement in 2019.
“These law firms took on the illegal lenders through the courts,” said Jay Speer, executive director of VPLC. “We are so grateful for their tenacity and passion to engage in this three-year fight for today’s settlement.”
The proposed settlement provides $450 million of debt cancellation for consumers. Most consumers will receive a cash payment, and the settlement accounts for the creation of a $39 million common fund for those who repaid unlawful amounts. Settlement class members do not need to submit a claim form and will receive notice via email or U.S. Mail.
In addition to litigation, VPLC helps borrowers through the organization’s predatory loan hotline (866-830-4501) and advocacy for better laws to protect borrowers. The 2020 Virginia General Assembly passed the Virginia Fairness in Lending Act after many years of effort by VPLC and others. Though legislation has pushed high-cost and abusive payday lenders out of Virginia, some still linger online. Properly licensed lenders make fair and affordable loans to those who need them. Virginians should never borrow from any lender that is not licensed as a short-term lender, consumer finance company, or a bank or credit union.
The Virginia Poverty Law Center (VPLC) is the state support center for all civil legal aid programs in Virginia. VPLC’s work breaks down systemic barriers that keep low-income Virginians in the cycle of poverty through advocacy, education, and litigation.
CONTACT: Ezra Halstead
Director, Center for Outreach, Virginia Poverty Law Center