RICHMOND, Va. (WRIC) — The Richmond federal court has given preliminary approval to a class action settlement that would provide $489 million in relief to victims of illegal online lending.
The ruling was issued on Thursday, May 12, and will affect approximately 555,000 consumers who were charged more than 600% interest on loans by predatory online payday lenders.
Litigation against predatory lenders began more than three years ago when a coalition of law firms, including the Virginia Poverty Law Center, Kelly Guzzo and Consumer Litigation Associates, came together to address the ongoing challenge of illegal payday lending.
“These law firms took on illegal lenders through the courts,” said Jay Speer, executive director of the Virginia Poverty Law Center. “We are very grateful for your tenacity and passion for engaging in this three-year fight for today’s deal.”
Today’s settlement is one of many these law firms have secured with illegal internet lenders in recent years, including a $433 million settlement in 2019.
The proposed settlement provides $450 million of debt cancellation for consumers that will be paid in cash for most consumers.
The agreement will also set aside $39 million for the creation of a common fund for those who paid illegal amounts.
Members of the settlement class will not need to submit a claim form and will receive notice by email or US mail.
In addition to litigation, VPLC helps borrowers through the organization’s predatory lending hotline at 866-830-4501 and advocacy for better laws to protect borrowers.