Two California-based lending companies, WS Funding and Cash Call, have reached an agreement with the Pennsylvania Department of Banking and Securities after the firms were discovered making loans at interest rates as steep as 169 percent. Nevada-based debt collector Delbert Services Corporation also was found to be in violation of the state's interest-rate law. The three companies will lower their interest rates to 6 percent and pay $1 million in refunds to customers. Borrowers, however, will still owe their debts.
Loan interest rates over 30 percent have been illegal in Pennsylvania since 2008. Since passage of Pennsylvania's interest-rate law, payday loan stores have become obsolete in the state. However, Edward Novak, a department spokesman, said that it is tougher to police online lenders that often operate outside the state or the country.
Authorities were made aware of the companies after receiving more than 100 complaints. More than 18,000 consumers may have been victimized by the illegal lending practices.