A class-action lawsuit has been filed in Pennsylvania against a debt buyer, accusing it of violating the Fair Debt Collection Practices Act by attempting to collect on a payday loan it acquired that had an interest rate that was illegally high. The debt buyer, as well as the broker that originated the sale of the accounts, are also accused of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act by conspiring with the payday lender that originated the loan in what is known as a “tribal lending” scheme.
A copy of the complaint in the case of Butler v. Market View, d/b/a DebtTrader, and Northwood Asset Management Group can be accessed by clicking here.
The plaintiff took out a payday loan with American Web Loans for $1,000. The terms of the loan included an interest rate of 602.32%, which would require her to repay $4,860.32 for the loan. The complaint alleges the terms of the loan violated state law in Pennsylvania, which caps the interest rate on unsecured consumer loans at 6%. The plaintiff repaid about $1,700 of the loan before she stopped making payments, at which point the account — along with other non-performing accounts — were listed on the broker’s platform and purchased by the defendant. When it acquired the account, the defendant made calls to the plaintiff to try and collect on the unpaid balance.
The debt buyer is accused of violating Sections 1692e(2) and 1692f(1) of the FDCPA by falsely representing that she had a legal obligation to repay the balance on her loan. It is accused of acquiring “thousands” of accounts from the payday lender.
The defendants are accused of knowing that the loans originated by the payday lender were unlawful.