Md. shutters MyCashNow, sister firms

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State regulators have issued a permanent cease-and-desist order against five online payday-lending and collection companies and their owner, saying the unlicensed companies were charging and collecting annual interest rates of 200 percent to more than 550 percent.

Maryland law limits the rate on unsecured personal loans to 33 percent, the Maryland Division of Financial Regulation said. The division issued the final order Tuesday, shutting down lenders MyCashNow.com, PayDayMax.com and DiscountAdvances.com, as well as the two collection agencies, Credit Payment Services Inc. and Credit Protection Depot Inc., the order said.

The Division of Financial Regulation also ordered the companies and their owner, Carey V. Brown, to pay a total civil penalty of $214,500.

The companies and Brown can appeal the order in a Maryland circuit court.

On July 29, Maryland Commissioner of Financial Regulation Mark A. Kaufman issued a summary order to stop the companies from making and collecting payments pending the completion of administrative action, which occurred with the final order.

Neither the companies nor Brown requested a hearing following the summary order, as was their right, Kaufman wrote in the order.

“These actions continue our ongoing battle against illegal online lending activity,” Kaufman said in a statement. “Following our original order in July, we have heard reports that these entities may have shut down in the face of regulatory activity by our state and others. Regardless, efforts to collect these illegal loans may continue, and today’s action serves notice that such efforts are also not permitted.”

Maryland’s action against Brown and his companies followed similar shutdowns against them by New York and his home state of Tennessee during the past two years.

Brown, who was not represented by counsel before the Maryland agency, could not be reached for comment Tuesday. In August, he posted a statement on his website after New York regulators issued a cease-and-desist order against his Chattanooga, Tenn.-based lending companies.

“Due to the current regulatory environment and a contraction of the financial industry’s support of [online] lending, we have determined that the ongoing viability of these companies is unsustainable,” the statement said. “As a result, we regretfully had to eliminate 400 positions across all companies, of which approximately 300 are located in Chattanooga. We appreciate the commitment and hard work of our colleagues and we wish them well.”

Kaufman’s cease-and-desist order cites 102 Maryland consumers as victims of the companies’ payday loans.

Payday loans, often marketed as helping customers make ends meet between paychecks, are characterized by short repayment periods and high interest rate.

According to Kaufman’s order, PayDayMax.com provided a $480 loan on Feb. 7, 2011, to a consumer, who was required to repay the principal plus a $159.60 finance charge by March 1, 2011. The $693.60 repayment represented an annual interest rate of 551.65 percent, the order stated.

MyCashNow.com loaned $200 to a different customer on Nov. 15, 2010, and required repayment by Dec. 10, 2010, plus a $33.25 finance charge — a 242.73 percent annual interest rate, according to the order.

In a third case, DiscountAdvances.com provided a $180 loan to a consumer on Oct. 6, 2006, and required that the principal and a finance charge of $34.88 be paid by Nov. 6, 2009. The annual interest rate on that loan was 228.16 percent, the order stated.