Attorney General Darrell V. McGraw recently reached settlement agreements with dozens of "payday lenders," requiring them to refund more than $1.57 million to 6,096 West Virginians.

That includes $804,167 in cash refunds and $768,619 in cancelled debts from payday lenders and collection agencies hired to collect delinquent loans.

Payday lenders often operate over the Internet, sending quick loans to working people for immediate cash. But those lenders charge borrowers enormous interest rates.

Assistant Attorney General Norman A. Googel, who works in the Consumer Protection Division, said payday lenders require borrowers to have jobs and checking accounts.

Typically, a payday lender might provide a $300 loan, then charge $90 in interest every two weeks until the loan is paid off. Lenders often withdraw payments directly from borrowers' checking accounts.

A regular bank, Googel pointed out, does not typically make a $300 loan to someone who needs quick cash.

"We began investigating this in 2005," Googel said. "Some states passed laws legitimizing them or regulating them. But payday loans have never been legal in West Virginia.

"We have usury laws against companies that end up charging customers 600 percent of 800 percent in annual interest," he said.

Payday lenders in West Virginia typically set up partnerships with Internet and out-of-state banks, like First American Cash Advance, and then claim they are not regulated by West Virginia law.

Attorney General Darrell V. McGraw recently reached settlement agreements with dozens of "payday lenders," requiring them to refund more than $1.57 million to 6,096 West Virginians.

That includes $804,167 in cash refunds and $768,619 in cancelled debts from payday lenders and collection agencies hired to collect delinquent loans.

Payday lenders often operate over the Internet, sending quick loans to working people for immediate cash. But those lenders charge borrowers enormous interest rates.

Assistant Attorney General Norman A. Googel, who works in the Consumer Protection Division, said payday lenders require borrowers to have jobs and checking accounts.

Typically, a payday lender might provide a $300 loan, then charge $90 in interest every two weeks until the loan is paid off. Lenders often withdraw payments directly from borrowers' checking accounts.

A regular bank, Googel pointed out, does not typically make a $300 loan to someone who needs quick cash.

"We began investigating this in 2005," Googel said. "Some states passed laws legitimizing them or regulating them. But payday loans have never been legal in West Virginia.

"We have usury laws against companies that end up charging customers 600 percent of 800 percent in annual interest," he said.

Payday lenders in West Virginia typically set up partnerships with Internet and out-of-state banks, like First American Cash Advance, and then claim they are not regulated by West Virginia law.

"It is a widespread loophole claimed by companies that make loans over the Internet. The Internet companies generally don't comply with the laws of any state," Googel said.

Payday lenders often have catchy names like: "Cash in a Wink," "Quick Draw Cash" and "Paycheck Today."

Three Native American tribal corporations were among the companies that recently settled with the Consumer Protection Division.

"They asserted tribal sovereign immunity prior to settling with us," Googel said.

Those companies agreeing to settlements included: Miami Nation Enterprises and SFS Inc., both affiliated with the Santee Sioux Nation of Nebraska, and MTE Financial Services, affiliated with the Modoc Tribe of Oklahoma.

"We are asserting our authority, Googel said. "We believe these loans are entered into in West Virginia, since many people make them on their computers while they sit in their living rooms or bedrooms."

"This is a debt trap. We have worked with consumers who got trapped into five or six different payday loans. They get wiped out financially.

"Just this past week, I talked to a lot of people in other states who asked for our help to stop payday lending in their states," Googel said.

The Consumer Protection Division can be reached by calling (800) 368-8808. Complain forms are available at: www.wvago.gov.

Reach Paul J. Nyden at pjny...@wvgazette.com or 348-5164.