CHARLESTON, W.VA. Ohio payday-loan company settles case

CHARLESTON, W.Va. (AP) -- The state attorney general's office has reached a settlement with an Ohio company that threatened to prosecute West Virginia consumers over defaulted loans.
National Payroll Advance of Cambridge, Ohio, has agreed to forgive more than $11,000 owed by 36 West Virginia consumers who defaulted on payday loans. The company also will pay $2,500 in restitution, Attorney General Darrell V. McGraw Jr. said Wednesday.
McGraw said the company stamped the words "We prosecute bad-check writers" in red ink on past-due notices to customers and accused some who failed to pay of "dishonesty" or "indecency." Both practices are prohibited in West Virginia.
While few payday lenders operate in West Virginia, many residents cross into Ohio to get payday loans. National Payroll Advance operates two offices close to the state line in St. Clairsville and Marietta, Ohio.
Payday loans allow cash-strapped consumers to surrender their next paycheck for quick money. Thirty-five states now regulate such loans, with five adding laws within the last three years.
Payday lenders typically charge between $15 and $20 in fees and interest for every $100 borrowed. That gives a two-week, $500 loan an effective annual interest rate that exceeds 450 percent. Borrowers will roll over their payday loans week after week, racking up more debt.