U.S. Wins $1.2 Million Penalty Against Bank for Aiding Payday Loans

April 26, 2014
payday lending news
The U.S. District Court in the Eastern District of North Carolina on April 25 ordered Four Oaks Bank to pay a penalty of $1.2 million over claims that it failed to protect the accounts of consumers who took out payday loans.

A complaint by U.S. prosecutors alleged that Four Oaks Bank allowed a privately owned third-party payment processor in Texas to illegally process an estimated $2.4 billion, in exchange for more than $850,000 in fees. Almost all of this business involved online payday lenders that offered fast cash at interest rates that ranged from 400 percent to 1,800 percent or higher.

The case was part of "Operation Choke Point," a push by the Justice Department to investigate banks that allow payday lenders to remove funds from U.S. checking accounts.

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