Five unlicensed internet short term lenders are being sued by Minnesota Attorney General Lori Swanson for exacting exorbitant interest rates on applicants, the Minneapolis/St. Paul Business Journal reports.
Despite not being licensed by the Minnesota Department of Commerce, the companies offered deals to residents that contained interest rates as high as 782 percent. "These internet lending companies are really a sign of the times," said Swanson, as quoted by the Pioneer Press. She added that many companies are "taking advantage of the economic turmoil and of consumers who are looking for a short, relatively small loan for anything from a car repair to groceries." The companies named in the lawsuit were Flobridge Group, Silver Leaf Management and Upfront Short term of Utah, and Integrity Advance and Sure Advance of Delaware. Swanson recommended that people in need of a loan instead attempt to find a licensed brick-and-mortar financial institutions to start a small line of credit. In Austin, Texas, Councilmember Bill Spelman is proposing a cap on short term lenders' interest rates, the American Statesman reports. His proposal includes regulations to cap cash advances at 20 percent of the consumer's gross monthly income.