Payday Loan Class Action Lawyer - Cohen & Malad, LLP

Payday Loans

US Predatory Lending Class Action Lawsuit Attorneys


A payday loan (also sometimes referred to as a payday advance, a small loan, or a deferred deposit loan) is a low-value, short-term loan that is usually for an amount less than $500 and that typically must be repaid within two weeks to a month. These loans generally are not offered by major banks but instead are provided both by companies with small bricks-and-mortar stores, and by a growing number of online lenders.

Increasingly, online payday lenders are charging rates on payday loans that violate some state usury laws (laws against charging unreasonable rates on loans) and that may in some cases constitute criminal loan-sharking. These unscrupulous lenders prey on people in severe financial distress who are in desperate need of cash to meet basic living needs, and who may not have access to other sources of credit.

For example, in cases brought by Cohen & Malad, LLP against online payday lenders, the lenders—who in some cases charged more than 1000% APR on loans—have actually marketed their loans as being helpful to those in financial trouble in order to lure consumers into taking out a payday loan. These are some actual quotes from the lenders’ websites:

[A] payday loan from a trusted online lender can make the difference between coasting till next payday, and worrying about the electricity being shut off. . . . .

Running short of money can be embarrassing. You don’t want to ask for a loan from a family member, or a friend. Filling out the [payday loan] application is quick and easy. . . . . And best of all, you don’t need to let your friends and family know that you’re in a bind . . . .

When I received notice that my car insurance was days away from being cancelled my paycheck was still two weeks away.

Just when I felt like I had nowhere to turn, a friend recommended that I apply for a [payday] loan . . . .

When my husband was laid off from his job, we were in a serious financial emergency. We knew it would be impossible to make ends meet without his income, and we needed immediate help until we could get back on track.

Knowing that their customers are in such financial hardship, some payday lenders are simply scamming these already financially-strapped customers out of hundreds, sometimes thousands, of dollars in illegal fees. For example, one payday lender charged a client $90 in finance charges every two weeks on a $300 loan. At the end of each two-week period, the lender would then renew the loan and charge the client $90 in finance fees again. By the time the client managed to close her checking account, the lender had charged her more than $707.10 in finance charges in less than 2 months by continuously renewing the loan– and would have continued to charge her if the account had remained open. These practices can trap customers in a never-ending cycle of high-interest debt in which customers find themselves forced to take out multiple new payday loans just to pay off their prior payday loans.

Fortunately, both state and federal governments have acknowledged the potential for abuse of consumers by payday lenders, and most states have passed payday lending laws to protect consumers. These laws often limit the amount of finance fees that a lender can charge a customer. They also prevent or limit the number of times a lender can renew a payday loan.

Utilizing these laws, Cohen & Malad, LLP has sued online payday lenders, including “Sandpoint Capital,” “LoanPoint USA,” and “Paycheck Today,” on behalf of thousands of customers who have been charged unlawful finance charges.

Unscrupulous lenders know that people in financial distress rarely have access to a lawyer, are often not aware of their legal rights, and may have claims for only a few hundred or thousand dollars. These lenders know that few, if any, lawyers would take such cases on an individual basis. However, by bringing a lawsuit as class actions on behalf of the many hundreds of customers of a lender, and by not charging any fees unless a lender pays, Indianapolis payday loan attorneys Cohen & Malad, LLP have been able to give payday loan victims their day in court.

If you have obtained a payday loan and believe that your consumer rights may have been violated, contact us by calling 317-636-6481 or complete the website submission form to speak with a class action lawyer who can discuss your legal rights and options.