First American Cash Advance

Charleston, WV: (May-10-07) Attorney General Darrell McGraw's office brought charges against payday lender First American Cash Advance, following an investigation into the payday lending practices of First American and Community State Bank of South Dakota. The suit alleged that First American had claimed it was operating as an agent of Community State Bank, a bank regulated by the Federal Deposit Insurance Corp. and the South Dakota Division of Banking. First American further asserted that federal law permitted the bank to charge interest rates that were allowed in South Dakota, even though those rates exceeded the maximum rates allowed in West Virginia. In a settlement reached, First American Cash Advance agreed to pay $838,500 to resolve the allegations against it. The settlement agreement included the forfeiture of about $616,000 in defaulted loans allegedly owed by nearly 2,700 West Virginia consumers, the payment of $200,500 to the state for consumer protection purposes and the payment of about $22,000 to the state to be used to distribute to approximately 400 West Virginia consumers who paid interest charges on payday loans after May 31, 2006. [CHARLESTON DAILY MAIL: PAYDAY LENDER FRAUD]

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Published on May-13-07