1300 Wisconsin consumers who entered into loan contracts with Arrowhead Investments, Inc. from December 21, 2001 through December 21, 2007 stand to receive relief in the form of loan forgiveness in a settlement agreement approved in Dane County Circuit Court on Wednesday, July 29, 2009. Pursuant to the settlement agreement, Arrowhead Investments, Inc. has also agreed that it will not conduct business for the next five years in the State of Wisconsin.
Arrowhead Investments, Inc. is a Kansas-based company in the business of providing short-term payday loans over the Internet. Internet payday loans typically are made when a consumer borrower authorizes the payday lender to access the consumer’s checking account. The payday lender deposits the principal loan amount directly into the consumer borrower’s checking account. Unless the consumer has repaid the loan by the loan due date, the payday lender automatically “refinances” the consumer borrower’s loan on the due date. When the loan is “refinanced”, a finance charge is assessed to the consumer borrower. Payday lenders make most of their profits from these finance charges. Unfortunately, there are no laws in Wisconsin that limit the interest rate that can be charged by payday lenders. Because there is no regulation on the amount of interest that can be charged, annual interest rates can easily reach triple digits.
Plaintiffs’ complaint against Arrowhead Investments, Inc. alleged various disclosure violations of the Wisconsin Consumer Act, common law unconscionability and violations of the Truth in Lending Act. Plaintiffs were represented by the UW Consumer Law Litigation Clinic and Lara Sutherlin from the Wisconsin Department of Justice.
For more information on the settlement, follow the link.