According to sources, a leading online payday loan company has agreed to lose its celebrity pitchman – Montel Williams. The company has also agreed to stop making leads for offering loans which are based on higher interest rates of up to 1000 %.
The regulatory authorities based in New York have confirmed this news. As per them – the Las Vegas based company will pay $2.1 Million as the penalty. The celebrity pitchman Montel Williams has said that he will stop promoting MoneyMutual Loans in the payday loan market.
According to investigators of this case – the company was promoting its illegal loan services in the shadow of promoting its business as MoneyMutual. According to rules, the maximum annual interest rate limits on payday loans is 16% in New York. A consent order from the company confirms this fact that ‘its interest rates on a 14 day payday loans package is between 261 percent and 1,304 percent. However, there is reported no violation of laws by Montel Williams. When the company was contacted for its statement, there was no response.
Payday loans are illegal in New York, and their direct promotion is strictly prohibited over there. Companies can refer clients to third parties offering payday loans but cannot directly see loans in the form of a disguised company. However, this would be the first time, when state has taken a strict step and legal action against a loan provider in New York.
The company MoneyMutual has signed a contract with the state regulators which says that Montel Williams should not be allowed to promote company’s lending packages in the state. This comes as an additional term other than the payment of $2.1 million Penalty.
The MoneyMutual has sold sensitive personal data of around 800,000 New Yorkers to sell direct payday loans to them, which is an illegal practice, claims DSF. The regulators have told the accused company to include new warnings and measures in this promotional activities from now onwards. A majority of customers of this company were borrowers who were caught in the debt payment cycle.
CEO of this company has confirmed that ‘around 55% of borrowers are their repeated clients. The company exclusively handled the ‘Gold’ borrowers which were taking frequent payday loans to pay off the old ones. Regulators have said – that the company MoneyMutual has misused the credibility and goodwill of Montel Williams to promote their illegal payday loans in New York.
The payday loan industry doesn’t exactly have a “clan bill on health, ” and this only adds fuel to the fire for those gunning for payday lenders. There are however legitimate needs for payday loans and legitimate payday loan services. However, legitimate or not borrowing a payday loan comes at a steep price no matter how you look at it.Read More