Massachusetts banking and consumer protection officials have ordered five payday lenders and their Las Vegas-based debt collector to stop taking payments on more than 100 allegedly illegal loans.
Several of the loans carried interest rates of more than 150 percent, officials said. The maximum interest rate allowed on loans smaller than $6,000 in Massachusetts is 23 percent.
The state Division of Banks ordered Delbert Services Corp., a licensed debt collector, and its owner John P. Reddam to stop all debt collections on loans that violate state law. The loans in question range from $850 to $5,075.
Delbert Services is also being ordered to refund all collection fees. The lenders and debt collector have 20 days to schedule a hearing to contest the cease orders, Amie Brown, spokeswoman for the office of Consumer Affairs & Business Regulation, said Tuesday.
Messages left with Reddam and Cesar Guzman, president and CEO of Delbert Services, were not returned Tuesday. The debt collection agency is located at 7125 Pollock Drive.
Delbert Services was founded in 2008 and is licensed, or has the authority to perform collections in 47 states, the company said on its website. The privately held firm does not disclose online in which states it does business.
The Nevada Division of Financial Institutions has not issued any enforcement actions against Delbert Services, according to the state agency’s website.
The questionable loans in Massachusetts were made by Cash Call Inc., WS Funding LLC, GP Investors LLC, Novea Resource Management LLC and Western Sky Financial LLC, according to state finance officials. None of the payday lenders are based in Nevada.
Reddam also owns WS Funding in Anaheim and its subsidiary Cash Call Inc., according to state regulators.
“We believe that these businesses knew that these predatory loans created serious injury to consumers by charging outrageous and illegal fees,” said Consumer Affairs and Business Regulation Undersecretary Barbara Anthony.
The lenders allegedly charged interest rates between 59 percent and 169 percent, state officials said. In a statement, David Cotney, commissioner of banks, called their actions a “blatant disregard for Massachusetts borrowers.”
Payday loans are small-dollar, high-interest, short-term loans usually repaid on a borrower’s next pay day.
The lenders issued cease orders in Massachusetts operate on the Internet making them difficult to track, and increasing borrowers’ risk of identity theft, the division said.
Contact reporter Chris Sieroty at firstname.lastname@example.org or 702-477-3893. Follow @sierotyfeatures on Twitter.