(PHOENIX, AZ) – Friday, April 06, 2012 -- Attorney General Tom Horne today announced that the Attorney General's Office has entered into a Consent Judgment with Cash 1, LLC, alleging that the company violated the Arizona Consumer Fraud Act. The Court approved the Consent Judgment earlier this week.
According to the allegations in the lawsuit, Cash1, LLC disguised small dollar consumer loans to Arizona consumers as "retail installment sales transactions" involving the sale of gift cards issued by large retailers such as Wal-Mart, Target, Fry's, and others on a credit basis, charging consumers interest with a typical annual percentage rate (APR) of 360%, a rate that exceeds that allowed for consumer loans in Arizona.
"This judgment demonstrates that even though state law now bans payday loans, consumers need to be very careful about other types of loans and financial products with high interest rates," Horne said. "My office remains committed to pursuing these cases aggressively."
As a result of the Attorney General's lawsuit, Cash 1 agreed to forgive approximately $295,000 in interest that it could have collected from consumers who purchased the gift cards and, additionally, refunded $72,000 to consumers who had already paid interest on the transactions. The Judgment requires Cash 1 to refund an additional amount of approximately $5,000 to consumers who have not yet received a refund. The Judgment prohibits Cash 1 from making illegal monetary loans to Arizona consumers and from charging interest on any loan that exceeds lawful rates. Finally, Cash 1 will be required to pay the Attorney General's office $40,000.
The Arizona Department of Financial Institutions also took action against Cash 1. On January 4, 2012, the Department of Financial Institutions issued a Consent Order against Cash 1, LLC, for allegedly engaging in consumer lending without the required license. Under that Order, Cash 1 was required to make a payment of $40,000.00.
This case was handled for the Attorney General's Office by Assistant Attorney General Cherie Howe. Assistant Attorney General Natalia Garrett represented the Department of Financial Institutions in its separate action.
If you feel you have been a victim of consumer fraud, please contact the Arizona Attorney General's Office Consumer Information & Complaints Unit at (602) 542-5763 / (520) 628-6504 / (800) 352-8431.