LITTLE ROCK — Attorney General Dustin McDaniel said Tuesday his office has obtained a court order banning a Missouri man and his companies from offering payday loans to Arkansans via the Internet.
McDaniel sued Josh Mitchem of Kansas City, Mo., and his companies, PDL Support and Platinum B Services, earlier this year, alleging Mitchem and his companies control several payday loan websites that charge customers excessive fees in violation of Arkansas law. The websites purport to be based on the Caribbean island of Nevis.
The lawsuit alleged that customers were charged fees that were the equivalent of interest rates as high as 644 percent. The state constitution caps interest rates on consumer loans at 17 percent.
In a consent judgment filed Tuesday, the defendants agreed to stop offering the loans in Arkansas and cancel any outstanding loans to Arkansans. Also under the order, payday lending websites controlled by the defendants must include language stating that loans will not be made to Arkansas residents.
The defendants also agreed to pay $80,000 to the state of Arkansas. They denied any wrongdoing.
In two rulings in 2008, the Arkansas Supreme Court said lenders charging high fees for short-term loans violated the state constitution’s 17 percent interest rate limit on consumer loans. After those rulings, McDaniel told payday lenders to shut down or face prosecution, and by August 2009 no payday lender had a store open in the state.
"Arkansas law prohibits this kind of lending, whether it’s from a storefront in the state or from a website supposedly based on an island," McDaniel said Tuesday in a news release. "These types of loans only push consumers further into debt. We will continue our efforts to stop online payday lenders on behalf of Arkansas consumers."
Mitchem said in an email Tuesday, "We’re pleased to have this matter resolved. We did nothing wrong in Arkansas, but wanted this settled so our company and its over 200 dedicated employees could continue working hard for our customers."
The lending operations controlled by Mitchem and his companies include Action Payday, Bottom Dollar Payday, Everest Cash, Paradise Cash Advance, The VIP Loan Shop and Red Leaf Lending.