Judge orders lender to pay NM customers $4.3m

Judge orders lender to pay NM customers $4.3m
Judge orders lender to pay NM customers $4.3m

Copyright © 2022 Albuquerque Journal

An Oklahoma-based lender must pay about $4.3 million to more than 1,200 of its New Mexico customers, a district judge has ruled in a class action lawsuit filed on behalf of the borrowers.

Courtesy loans violated New Mexico law by using store employees — rather than attorneys — to bring civil lawsuits against customers who failed to repay their loans, 2nd Court Judge Elaine Lujan said. of judicial district.

“Courtesy Loans’ primary motive in improperly using store employees to sue borrowers was financial in nature — to save the company money,” Lujan wrote in its July 14 ruling.

Courtesy Loans, which has 10 locations in New Mexico, provides loans of up to $900 each at annual interest rates of up to 175%, Lujan wrote.

New Mexico lawmakers passed a bill this year that will lower the cap on annual interest rates charged by storefront lenders to 36% effective Jan. 1. Governor Michelle Lujan Grisham signed the bill into law in March.

Currently, title loans and other small loans can carry annual interest rates of up to 175%.

An Albuquerque attorney who filed the lawsuit on behalf of 1,254 Courtesy Loans customers said the practice of using non-attorneys to sue has been used by other lenders as a cost-cutting measure.

Attorney Richard Feferman said he filed two similar class action lawsuits against storefront lenders in 2011 and 2014. Both lawsuits ended with lenders paying settlements to borrowers, he said.

The lawsuit against Courtesy Loans was filed in 2015. Judge Lujan held a trial in this case in May.

“Each of these cases has been a little different,” Feferman said Friday in a phone interview. “The fundamental problem is that they abuse the courts and use the court system as their piggy bank.”

Lawyers representing Courtesy Loans did not immediately return phone messages Friday seeking comment.

A phone message left Friday with Tim Kester, who is identified in court records as the company’s representative and chief executive, was not immediately returned.

Courtesy Loans filed more than 3,700 lawsuits statewide from 2011 to 2015 in New Mexico trial and metro courts, according to court records.

These lawsuits were usually brought by store managers or other employees. Using non-lawyers to file these lawsuits violated New Mexico’s unfair practices law, Lujan wrote.

“Courtesy Loans did not hire lawyers to file their lawsuits because it costs more,” she wrote. “It was more profitable to use store employees to sue.”

She estimated that using store employees to file the claims saved the company about $275 per lawsuit.

The company collected $569,971 by garnishment or payment in 1,254 of those lawsuits. Lujan ordered Courtesy Loans to pay this amount as restitution to the borrowers.

She also ruled that each class member is entitled to $3,000 in damages — a total of more than $3.7 million — under New Mexico’s unfair practices law.

In 2019, former 2nd Judicial District Court Judge Clay Campbell barred courtesy lenders from using non-lawyers to sue borrowers, according to court records.

Feferman said store employees who filed the lawsuits often overestimated the amount of money owed to borrowers.

“They were asking for more money than they were entitled to,” Feferman said of store workers. For example, lawsuits often illegally demanded interest owed over the term of the loan, even though the interest had not been earned, he said.

Too often, judgments have been delivered routinely in a default judgment that has received little consideration from a judge, he said.

Lenders “have the right to lend money,” Feferman said. “They have the right to collect if they don’t get paid and they have the right to use the court system. They just have to do things the right way.

. judge orders lender to pay million dollars to customers

. Judge orders lender pay customers #4.3m

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