LITTLE ROCK — Attorney General Dustin McDaniel filed a lawsuit Tuesday alleging that a Kansas-based collection agency has illegally sought to collect on payday loan debts in Arkansas.

The lawsuit filed in Pulaski County Circuit Court alleges that National Credit Adjusters of Hutchinson, Kan., has violated the Arkansas Deceptive Trade Practices Act in attempting to collect on debts from payday and high-interest installment loan debts.

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 limit on the interest rate 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.

McDaniel said Tuesday that payday loan debts are not enforceable in Arkansas.

"Though we have successfully shut down storefront payday lenders, we will continue to aggressively pursue online lenders who violate Arkansas law or collection agencies like this that attempt to collect on illegal debt," he said in a news release.

A National Credit Adjusters employee who identified himself only as "Paul" said Tuesday the company is working with the attorney general’s office to resolve the matter.

McDaniel is seeking an order that the company cease actions that violate Arkansas law, cancel outstanding usurious loan contracts and return to Arkansas consumers any money collected based on payday or high-interest installment loans. He also is seeking civil penalties and costs.