RICHMOND, Va. (WRIC) — The federal court in Richmond gave preliminary approval to a class-action settlement that would provide $489 million of relief to victims of illegal internet loans.
The ruling was made Thursday, May 12, and will affect approximately 555,000 consumers that were charged over 600% interest on loans by predatory internet payday lenders.
Litigation against predatory lenders began over three years ago when a coalition of law firms including the Virginia Poverty Law Center, Kelly Guzzo and Consumer Litigation Associates assembled to address the ongoing challenge of illegal payday loans.
“These law firms took on the illegal lenders through the courts,” said Jay Speer, executive director of Virginia Poverty Law Center. “We are so grateful for their tenacity and passion to engage in this three-year fight for today’s settlement.”
Today’s settlement is one of many that these law firms have obtained with illegal internet lenders over the past several years, including a $433 million settlement in 2019.
The proposed settlement provides $450 million of debt cancellation for consumers that will be paid out in cash for most consumers.
The settlement will also set aside $39 million for the creation of a common fund for those who repaid unlawful amounts.
Settlement class members will not need to submit a claim form and will receive a notice via email or U.S. Mail.
In addition to litigation, VPLC helps borrowers through the organization’s predatory loan hotline at 866-830-4501 and advocacy for better laws to protect borrowers.