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Va. files suit against payday lender making illegal loans

7/19/2013, 2:35 p.m.

— Attorney General Ken Cuccinelli has filed a lawsuit against Jupiter Funding Group, LLC , an Internet payday lender, alleging it is making illegal payday loans to Virginia consumers without having a valid state payday loan license.

The Virginia State Corporation Commission (SCC) requires every payday loan lender to obtain a license before conducting business in Virginia. Without a license, lenders can charge no more than 12 percent in annual interest on a loan. According to Jupiter Funding's terms and conditions, the interest rates on its payday loans ranged anywhere from 438 percent annually for a 25-day loan to 1,369 percent annually for an eight-day loan.

The attorney general alleges that Jupiter Funding made loans to Virginia consumers through its web site, www.directpaydayfunds.com, from January 13, 2010, to the present without a license. Jupiter Funding's business appears to be carried out exclusively through the Internet. Consumers are instructed to apply for loans through the company's website, and after the loan applications are approved, Jupiter wires funds directly to the consumers' bank accounts. As part of the application process, consumers are required to authorize Jupiter to directly debit loan payments from their bank accounts as well.

"Jupiter Funding has preyed on Virginia consumers by making high-interest rate loans over the Internet without any regulatory oversight. My office will continue to aggressively pursue those who violate Virginia's consumer lending laws," Cuccinelli said.

The Virginia payday loan laws generally define "payday loan" as a small, short-maturity loan on the security of a check, an assignment of an interest in a bank account, or an assignment of income payable to an individual. Violations of the payday loan statutes also violate the Virginia Consumer Protection Act (VCPA).

Cuccinelli's office filed the lawsuit in the Arlington County Circuit Court, which requests that the court stop Jupiter Funding from violating the payday loan laws and the VCPA, as well as from collecting interest over Virginia's legal limit of 12 percent when it does not have a license to do so. The suit also seeks consumer reimbursement of certain interest paid and civil penalties in the amount of $2,500 for each violation of the VCPA.

Though Jupiter Funding lists a Delaware address as its main address on its web site, the attorney general's office believes that the company's operations are actually based in the Kansas City area.

Assistant Attorney General Mark Kubiak and Senior Assistant Attorney General Dave Irvin are representing the commonwealth in this case.