The state of Virginia has filed a lawsuit against Net Credit, alleging the online lender made more than 47,000 loans totaling more than $47 million, which are illegal and violate the state’s usury law.
The lender violated the state’s 12% interest rate cap and made loans with rates as high as 149%, according to the complaint. The usury cap applies to all consumer loans except those made by licensed finance companies, car-title lenders, payday lenders, credit card firms, and banks. A published report indicates that Net Credit does not have a license in Virginia.
Net Credit also was accused of continuing to debit money from the bank accounts of customers after those individuals had filed for bankruptcy protection and won freezes on debt collection activities. The company was also accused of making calls and sending emails demanding payment from individuals who had filed for bankruptcy protection.
Net Credit is a subsidiary of Enova International, which earned $705 million in revenue on fees and interest last year, according to a published report.
The company allegedly tells individuals that it is regulated by the state of Utah. But Utah does not license lenders or regulate any activities outside of the state.
“We’ve seen more and more Virginians turn to online lenders in a time of need only to find they’ve signed up for a debt trap that is going to cost them hundreds if not thousands of dollars in finance charges and fees,” said Virginia Attorney General Mark Herring.