The payday loan industry in Missouri is booming. There are four times as many payday lenders as there are McDonald's restaurants. Yet lurking behind the promise of quick cash is an economic trap of spiraling debt and loans with interest rates that can top 400 percent. Although Missouri has laws prohibiting some predatory practices, a class action lawsuit filed last month alleges that at least one lender has ignored them.
The class action lawsuit was filed on Oct. 10 in St. Louis County against Overland Park-based QC Financial Services Inc. d/b/a Quick Cash. The company employs more than 1800 people nationwide; 97 of its 564 stores are located in Missouri. The lead plaintiff is Dequae Woods, a single mother of two who works at a medical facility. Beginning on Oct. 15, 2004, Quick Cash loaned Ms. Woods money but allegedly violated Missouri law when it renewed her loan more than six times at a rate of 469 percent, never evaluated her ability to repay the loan, and charged more than 75 percent of the original loan amount in interest and fees.
St. Louis lawyers John Simon and Erich Vieth of The Simon Law Firm and Debra K. Lumpkins of Gateway Legal Services assert that Woods is not the only victim of Quick Cash's predatory practices. For that reason, they filed a class action lawsuit. The proposed class includes Missourians who received loans from Quick Cash in which the company engaged in one or more the following actions:
- Failed to consider the financial ability of the borrower to repay the loan in the time and manner outlined in the contract;
- Charged a total amount of accumulated interest and fees exceeding 75 percent of the initial loan amount during the entire term of the loan or for renewals of the loan;
- Didn't reduce the principal amount of the loan by at least five percent as part of a renewal;
- Renewed the loan more than six times.
The payday loan industry is growing at an alarming rate on the backs of low-wage borrowers. "The least they could do is comply with Missouri's laws," said Erich Vieth of The Simon Law Firm.
St. Louis-based The Simon Law Firm handles catastrophic injury, mass tort, class action and intellectual property cases nationwide. Gateway Legal Services is a non-profit, legal-aid law firm dedicated to helping consumers who have been wronged or defrauded.