New Mexico Court Gives Go-Ahead for Group of Consumers to Challenge Lenders
A New Mexico Appeals Court in early March gave the go-ahead for a class of consumers to continue its lawsuit against payday lenders charging illegal interest rates.Lead class member Andrea Felts and other New Mexico consumers who obtained loans for less than $2,500 allege that the defendants engaged in online lending practices in direct violation of New Mexico State law.
“The Court of Appeals has insisted that our client should be given her day in court,” said Public Justice Senior Attorney Paul Bland, who argued for the plaintiffs in Andrea Felts v. CLK Management Inc. and Cash Advance Network, Inc. “These Internet payday lenders were trying to use the fine print of their contract to exempt themselves from and undermine New Mexico’s consumer protection laws by shielding them from any kind of lawsuit.”
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 an online payday lender for three loans of around $400 each.
She was then charged interest rates of 684, 730 and 521 percent on those loans.
When Felts could not keep up with her payments, the lenders began to contact her repeatedly, both at work and at home. She sometimes received more than 20 calls a day, and her teenage daughter was subjected to harassing calls as well. The lenders threatened Felts with jail.
New Mexico Attorney General Gary King and Assistant Attorney General Karen Meyers joined Public Justice in filing an amicus brief on behalf of the plaintiffs.
“My office supported this lawsuit because we believe the lenders in this case took advantage of consumers and such practices are against public policy,” said New Mexico Attorney General Gary King. “I am pleased that the Court of Appeals directed that the victims here will be allowed to continue their legal action against these lenders. New Mexico adopted legislation in 2007 that regulated the payday loan industry to protect consumers from excessively high interest rates and unfair business practices such as those alleged in the plaintiffs’ lawsuit.”
Lead counsel for Felts is Rob Treinen of Albuquerque. The plaintiffs are also represented by the Schaefer Law Firm of Minneapolis, Minn. Public Justice’s Goldberg Attorney Amy Radon was the principal author of Felts’ appellate brief.