Hundreds of high-interest loans offered by a catalog store in upstate New York have been voided by state Supreme Court Justice Bernard J. Malone of Albany County, according to a news release this week from New York Attorney General Eliot Spitzer's office.
JAG NY and its owner, John Gill, operate three NY Catalog Sales stores in Watertown and Queensbury, NY, and made high-interest loans to consumers, according to the decision. Many of the loans were made to military families near Fort Drum. NY Catalog Sales also was found to have provided loans without a license and engaged in illegal debt-collection practices.
NY Catalog Sales promoted the availability of “fast cash,” according to the attorney general's office, of up to $500 to attract consumers into its stores. Consumers were told that for every $50 borrowed they must buy $15 in gift certificates or catalog merchandise. Consumers would then present the store with a postdated check in the amount they wished to borrow and the cost of the merchandise or gift certificate. The store would agree to deposit the check on the consumer's next payday.
“As in most payday loan scenarios, NY Catalog Sales customers were usually unable to repay their loan on their next payday, and fell into a cycle of repeating their transactions so that they could use the newly borrowed cash to cover their previous check,” Spitzer's office said. “With every 'rollover' of their loan, however, the consumer was required to purchase additional gift certificates, quickly resulting in the total cost of the certificates exceeding the amount of the individual's loans.”
Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters