Two internet payday lending companies charged Andrea Felts, a New Mexico resident, astronomical interest rates in violation of New Mexico law. Then the companies claimed that their mandatory arbitration clauses and class action bans barred Ms. Felts from holding them accountable. Last month, the New Mexico Court of Appeals held, as Public Justice had requested, that the companies’ class action bans and mandatory arbitration clauses were unenforceable.
The Appeals Court gave Ms. Felts the go-ahead to join with other consumers and challenge the companies’ lending practices in a class action. Now the companies will have to answer for conducting online payday lending in direct violation of New Mexico law. The case began in late 2007 when Ms. Felts, then a 38-year-old high school administrator in Albuquerque, was going through a costly divorce. In need of extra money to make ends meet, she turned to online payday lenders for three loans of around $400 each.
Ms. Felts was then charged interest rates of 684%, 730% and 521% on her three loans. She couldn’t keep up with her payments, and the lenders began to contact her repeatedly, both at work and at home. This unfortunate woman received more than 20 calls a day. Her teenage daughter was subjected to harassing calls, as well. The lenders even threatened Ms. Felts with jail time.
When Ms. Felts tried to bring a class action lawsuit on behalf of all consumers who had obtained small-dollar loans from these lenders, the lenders argued that the suit was barred by the arbitration clause and class action ban contained in all of their consumer contracts. Public Justice took on the case and handled the appeal, which was successful. The following lawyers should be commended for their good work in this matter: Senior Attorney Paul Bland, who argued the case; Amy Radon, the principal author of the successful brief; lead counsel for the Plaintiff, Rob Treinen of Albuquerque; and Plaintiff’s co-lead counsel, Richard Fuller and Douglas Micko of the Schaefer Law Firm of Minneapolis, Minn. New Mexico Attorney General Gary King, along with Assistant Attorney General Karen Meyers, who filed an amicus brief in support of Ms. Felts and her fellow consumers, should also be commended for their assistance.
Source: Public Justice
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