On December 11, 2018, the Massachusetts Division of Banks (“Division”) entered into a consent agreement with a California small loan company and licensed debt collector to resolve allegations that the company had collected interest in excess of the maximum amount permitted under state law.
The consent agreement follows a compliance examination of the company. The examination culminated with the issuance of a report which found that the company had engaged in substantial non-compliance with applicable law by, among other things, collecting interest that exceeds the maximum amount permitted and engaging in the small loan business prior to obtaining the small loan license. Under Massachusetts law, small loans are defined as consumer loans for six thousand dollars or less with interest rates exceeding 12% annually, and the state’s small loan rate order sets forth a maximum interest rate of 23% on small loans.
Per the consent agreement, the Company has agreed to pay an administrative penalty to the Division of $10,000. The company affirmed that it has ceased purchasing small loans in Massachusetts as of, or prior to February 26, 2018, and agreed to immediately surrender its Massachusetts Small Loan Company License.