It took six years, 17,000 billable hours, three law firms and three public justice organizations, but in the end they managed to wrestle a payday loan company in North Carolina into a settling with thousands of unhappy customers. “We have had great reaction from clients,” says Paul Bland, with the Public Justice organization in Washington, DC. “The settlement was a compromise. But we faced enormous legal challenges and we made the decision that this was a good settlement compared to the risks going forward.”
The payday loan industry is notoriously hard-nosed and has deep pockets when it comes to fighting lawsuits. However, Advance America, the largest payday lender in the US, agreed to pay $18.5 million to settle a class action suit that argued it had contravened North Carolina's state usury laws. Class members—about 140,000 Advance America customers in North Carolina—will get back at least some of the lending costs they paid out.
According to the suit, Advance America was charging annual interest rates of somewhere between 350 and 500 percent. “We had one client, for example, who borrowed $200. They made $2000 in payments to Advance America and still owed the principle,” says Bland, who took or read at least 50 depositions in the case against Advance America and talked to dozens of expert witnesses.
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