A California cash advance lender has agreed to provide more than $2 million in debt relief to Massachusetts borrowers, including veterans, over allegations that it issued predatory and illegal loans, many with interest rates higher than 100 percent.
In exchange for the upfront loans, the company allegedly deducted a portion of pension payments each month from consumers’ bank accounts, the investigation found.
As part of the settlement agreement with Attorney General Maura Healey, lender Future Income Payments LLC, formerly known as Pensions, Annuities and Settlements LLC, agreed to convert its current contracts with 85 affected pensioners into interest-free loans, and refund any payments the borrowers made beyond the principal balance.
The company has also been barred from making future loans in Massachusetts.
Healey’s office found that Future Income Payments made loans ranging from $1,800 to more than $40,000 and was allegedly charging consumers interest rates that exceeded the state’s 12 percent cap on loans smaller than $6,000 and 20 percent cap on larger loans.
Many of the consumers were veterans receiving military pensions.
Among the victims of the alleged scheme was a veteran who was required to pay $24,000 on a $5,000 loan under a contract that allowed Future Income Payments to deduct $415 a month from the veteran’s bank account for five years.
“This is yet another example of predatory lending by a company trying to illegally profit off of vulnerable people, in this case retired veterans and other retirees living on fixed incomes,” Healey said in a statement Monday.