- Associated Press - Thursday, March 20, 2014

BILLINGS, Mont. (AP) - A Kansas-based internet payday loan company has agreed to forgive hundreds of thousands of dollars in debt under an agreement in a Montana class action lawsuit.

The case began in 2011 when Tiffany Kelker of Billings sued over a $500 loan. She had paid more than $2,100 to LoanPoint USA over six months, but still owed the original $500, The Billings Gazette (http://bit.ly/1dtdatP) reported.

Attorney John Heenan said Kelker was paying 800 to 1,000 percent annual interest. Montana law caps the rate at 36 percent. More than 400 people joined the lawsuit against Geneva Roth Ventures Inc., of Mission, Kan., which does business as LoanPoint USA.

Heenan and Assistant Attorney General Chuck Munson of Helena presented the settlement to District Judge Russell Fagg on Wednesday.

“We’re both really proud that real money will go out to these people,” Heenan said. “This is an important restriction against high-interest payday lenders.”

Geneva attorney Peter Habein also asked that the judge approve the settlement in which LoanPoint agreed to forgive the outstanding balances of those involved in the lawsuit, while the 335 borrowers who repaid LoanPoint will share in a $233,000 settlement.

Refunds will range from just over $27 to nearly $3,000. The average refund will be just under $500 and the checks will be mailed within 20 days, Heenan said.

The settlement called for $30,000 in attorney’s fees for Heenan, another $30,000 for an attorney who defended an appeal to the U.S. Supreme Court and $6,000 to go to the state for costs in locating the borrowers and mailing the checks.

Before approving the settlement, Fagg said Heenan’s $30,000 fee seemed low.

“People are rightly concerned in some consumer actions that the consumer gets coupons and their lawyers get all these attorneys’ fees,” Heenan said.

The company also agreed to stop doing business in Montana unless it registers with the state, Munson said. It also agreed not to harm borrowers’ credit ratings or try to collect debts through third-party collection agencies.

Heenan said the exact amount of debt being forgiven wasn’t calculated, but it amounted to several hundred thousands of dollars.

Other states have settled similar cases with LoanPoint, Heenan said. In May 2011, the Arkansas attorney general reached a settlement with LoanPoint that required it to stop doing business in the state and to forgive all outstanding loans.


Information from: The Billings Gazette, http://www.billingsgazette.com