Payday lenders got another black eye after New York’s main regulator fined a widely publicized site for marketing illegal high-interest loans.
The rule with Selling Source, whose ads for his payday lead generation site, Money Mutual talk show host Montel Williams includes a $ 2.1 million fine and a deal to add a warning to his ads National broadcast in New York indicating that the service is not available in the state. The company and Williams will be prohibited from making new New York-specific advertisements that do not comply with state usury laws.
However, the ads will continue to run in other states.
“Using Mr. Williams’ reputation as a trusted celebrity, MoneyMutual marketed loans to struggling consumers with sky-high interest rates – sometimes over 1,300% – that trapped New Yorkers in destructive debt cycles, “said Benjamin M. Lawsky, superintendent of financial services, in a statement.
“The New York State Department of Financial Services’ has not found any violation of the law by Mr. Williams, and the agreement does not require him to pay fines or penalties,” said Jonathan Franks, spokesperson for Mr. Williams, in a written statement. “Mr. Williams and his team cooperated fully with the DFS throughout the investigation.”
MoneyMutual customers are “informed” and “make their own decisions” about the loans they choose through the site, Charles Goodyear, spokesperson for Money Mutual, said in a statement.
“Hundreds of thousands of consumers were matched with a responsible lender, got the short-term financing they needed, and paid back the money that was loaned to them,” he said.
New York is the latest to take action against SellingSource as regulators and watchdogs increase their scrutiny of payday loans. The Consumer Financial Protection Bureau has included the company in his recent survey of the payday loan industry. Pennsylvania and Illinois sued the company last year for generating leads for loans that violated state loan laws.