Security Finance will have to refund some of the fees it charged its loan customers dating back to 2004, under an agreement reached with Attorney General John Suthers office.
The company had 13 locations in Colorado – Colorado Springs, Alamosa, Cortez, Denver, Grand Junction, Pueblo and Trinidad.
“Colorado’s lending laws are designed to ensure that consumers are given a fair shake when they need to borrow money. My office is dedicated to vigorously pursuing lenders that violate Colorado law by taking advantage of consumers,” Suthers said. “This case marked the first time my office alleged a lender was making loans to consumers who had no reasonable ability to pay off the loans.”
The complaint was filed in Denver District Court and alleges that Security Finance effectively prevented its borrowers from paying back their small-installment loans through business practices that violated the Uniform Consumer Credit Code.
The company is accused of refinancing loans to maximize the number of fees it can charge.
Colorado law limits small-installment loans to no more than $1,000, which must be repaid within 12 months in substantially equal installments. Colorado law also caps the number of refinances per year at three. State law bars lenders from making loans to people who do not have a reasonable ability to repay their loans.
Under the agreement, Security Finance has agreed to refund the acquisition fees it charged customers in excess of the three in a year. As a result of the case, Security Finance and its parent corporation, Security Finance Corporation of Spartanburg, decided to close its Colorado operations and, as part of the settlement, to surrender its lending licenses.
Security Finance has agreed under the settlement to pay $125,000 for the state’s attorney and expert-witness fees.