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Archive for October, 2009

Phoenix Lawsuit Targets Payday Loan Court Abuses

The State of Arizona is accusing a major payday loan company in a Phoenix court of engaging in deceptive loan practices. State prosecutors claim the the company, Quik Cash, was illegally collecting default judgments by filing collections lawsuits in courts far from where debtors live or took out the loans.

Quik Cash and its parent company, QC Holdings Inc. of Overland Park, Kan., are the named defendants in a lawsuit filed Friday in Pima County Superior Court in Tucson by the Attorney General’s Office. The lawsuit contends that Quik Cash promised lenders in the past three years that it would follow Arizona law in it’s collections and legal actions against customers.

The company, however, has filed hundreds of collections suits in Pima County against nonresidents even though state law requires that the small-claims suits to be filed either where a defendant lives or took out a loan. This reduced collections costs for the company while making it easier for the company to obtain default judgments and wage garnishments because it’s more difficult for defendants who live elsewhere to contest the suits.

“For rural customers, this is a difficult and onerous burden,” Quik Cash Lawsuit Brief.

Quik Cash even sued out of state Nevada customers in Pima County, which is located in southern Arizona, although the customers obtained their loans some 300 miles away in Bullhead City, near the Nevada border in Arizona’s Mohave County.

The company’s practices set up “a veritable assembly line of default judgments” that make a mockery of the Arizona court system.

-Arizona Attorney General Terry Goddard

QC Holdings spokesman Tom Linafelt responded to the suit saying that Quik Cash tries to comply with Arizona law and was unaware of the “administrative issue.” He said the company will cooperate with the state and was investigating the matter internally.

Arizona Legal Action Against Payday Loan Company

A judge in Tucson on Friday granted the attorney general’s request for a preliminary injunction barring the company from filing lawsuits in the wrong courts or pressing cases already filed in the wrong courts. The states’ lawsuit seeks up to $5 million in restitution, asks the court to set aside hundreds of court judgments against Arizona payday loan borrowers and seeks to stop the company from doing business in Arizona.

QC Holdings said on its Web site that it operates 563 branches in 24 state, lending nearly $1.4 billion to customers. It’s website is currently down.

Read More:

News 5 Arizona Seeks to Shut Down Arizona Payday Loan Company