In an ongoing crackdown on Web-based lenders, New York authorities have fined auto title lender Manor Resources for violating the state's interest rate ceiling. Attorney General Eric Schneiderman on Dec. 16 fined the Chicago-based outfit more than $33,000 and ordered it to forgive the balance of all its New York loans, estimated at $28,000. He also announced that loan agreements in New York cannot include mandatory arbitration clauses, which require all disputes between borrowers and the lender to be dealt with in arbitration rather than the court. The state claimed that some of Manor Resources' loan contracts included such language.
Manor Resources allegedly charged borrowers 10 percent a month for short-term loans secured by the title of the borrower's car. By law, the maximum annual rate for a loan of $25,000 or less is 25 percent for companies licensed by the state Department of Financial Services (DFS) and 16 percent for all others. Efforts by Schneiderman and DFS Superintendent Benjamin Lawsky have earned New York a reputation for its tough stance against online small-dollar lenders. "New York is not open for business to predatory online lenders," Schneiderman said in a release, "and Manor is just the latest company to learn that lesson."