NY attorney general reaches settlement with debt collector to avoid payday loans

Lifestyle and BudgetAssociated Press

New York's attorney general has announced a settlement with Forster & Garbus, a Long island-based debt collection firm, to ensure it doesn't file court claims against New Yorkers to collect on so-called payday loans for small amounts at high interest rates.

State officials say such loans are illegal in New York, where the top legal interest rate is 16 percent for most lenders not licensed by the state.

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Attorney General Eric Schneiderman says a company called NCEP, LLC placed consumer debts with Forster & Garbus for collection that included payday loans.

Under the agreement, the firm may not file to collect against a New Yorker without obtaining a copy of the loan document and determining it's not a payday loan.

It will also pay $10,000 in costs and penalties.