Press Release

May 18, 2016

Contact: Richard Loconte, 212-709-1691

DFS Announces Settlement with Two Debt Buyers Resulting in $3 Million of Restitution to Thousands of New York Consumers

National Credit Adjusters to Pay $200,000 Penalty and CKS to Pay $25,000 Penalty for Collecting on Illegal Payday Loans

The New York State Department of Financial Services (DFS) announced today that it has entered into consent orders with two debt buyers, National Credit Adjusters, LLC (NCA) and Webcollex LLC (doing business as CKS), resulting in restitution of $3 million to New York consumers. NCA and CKS improperly purchased and collected on illegal payday loans from New York consumers. As part of the restitution, NCA will discharge more than $2.26 million in New York consumers’ payday loan debts and provide refunds totaling $724,577 to more than 3,000 New Yorkers.  CKS will issue $66,129 in refunds to the 52 New York consumers affected by its unlawful practices, as well as discharge $52,941 in debt to 106 New Yorkers. Today’s settlements represent the first DFS settlements to provide consumer restitution to New York consumers harmed by payday loans.

“Payday lending is illegal in New York, and debt collectors, like National Credit Adjusters and CKS, who collect or attempt to collect outstanding payments from New Yorkers in violation of New York State and federal Fair Debt Collection Practices laws will be held accountable,” said Maria T. Vullo, Acting Superintendent of Financial Services. “DFS will take swift and appropriate action to protect New Yorkers and send a clear message that New York State will not tolerate those who attempt to profit from illegal payday loan activity.”

Payday loans, which are small dollar loans typically structured as an advance on a borrower’s next paycheck, are illegal in New York. The fees charged on payday loans, when annualized, generally carry an interest rate many times greater than the civil and criminal usury limits set by New York, 16 percent and 25 percent respectively.

DFS’s investigation uncovered that NCA attempted to collect on 7,325 payday loan debts of New York State consumers and collected payments on 4,792 of those debts between 2007 and 2014.  The DFS investigation also found that NCA engaged in unlawful debt collection practices when NCA sought to collect on illegal payday loan debts from New York consumers. NCA repeatedly called consumers at home and at work, threatened to call consumers’ employers, and called consumers’ family members to pressure them to pay their alleged payday loan debts.

As part of the settlement, NCA has ceased all collection on payday loans in New York and will:

  • Discharge all debt connected with the New York payday loan accounts it currently holds;
  • Contact credit reporting bureaus and request that any negative information NCA provided relating to New Yorkers’ payday loan accounts be removed;
  • Move to vacate any judgments NCA obtained on New Yorkers’ payday loan accounts; and
  • Release any pending garnishments, levies, liens, restraining notices, or attachments relating to any judgments on New Yorkers’ payday loan accounts.

The NCA settlement covers all consumers in New York State who had payday loan accounts that NCA collected on from 2007 to 2014, except consumers residing in New York City who already received relief under a 2014 settlement with the New York City Department of Consumer Affairs (DCA).  Any New Yorker who has not received restitution under the DCA settlement may be entitled to relief under the DFS settlement.

Letters will be sent by NCA to consumers by June 15, 2016 and refund checks will be provided on a rolling basis through May 15, 2017.  Consumers with questions about this settlement, as well as any New Yorker who has had a collection account with NCA and who believes that she or he may be entitled to a refund under the terms of the settlement, are encouraged to contact the DFS Consumer Hotline at (800) 342-3736 or at [email protected]. Additional information on this settlement can be found here. A copy of the NCA consent order can be found here.

The Department’s investigation into CKS revealed that CKS attempted to collect on hundreds of payday loan debts of New Yorkers and collected payments from 52 New York consumers.  All consumers covered by this settlement will receive letters and checks by July 15, 2016. Consumers with additional questions about the CKS settlement can contact the DFS Consumer Hotline at (800) 342-3736 or [email protected].  A copy of the CKS consent order can be found here.


Payday loans are illegal in New York State. It is a violation of New York State law to make payday loans in-person, by telephone, or over the Internet. It is also illegal for a debt collector to collect, or attempt to collect, on a payday loan in New York State.

To File a Complaint

  • File a complaint with the Department of Financial Services at (800) 342-3736 if you believe payday loans are being made in New York or to New York residents, or if a debt collector is seeking to collect on a payday loan in New York.

What is a Payday Loan?

A payday loan is a relatively small, high-cost loan, typically due in two weeks and made with a borrower’s post-dated check or access to the borrower’s bank account as collateral.

Payday lending is illegal in New York for a number of reasons:

  • Payday loans are designed to trap borrowers in debt. Due to the short term, most borrowers cannot afford to both repay the loan and pay their other important expenses.
  • If the loan cannot be paid back in full at the end of the term, it has to be renewed, extended, or another loan taken out to cover the first loan. Fees are charged for each transaction.
  • The annual percentage rates on payday loans are extremely high, typically around 400% or higher.
  • Lenders ask that borrowers agree to pre-authorized electronic withdrawals from a bank account, then make withdrawals that do not cover the full payment or that cover interest while leaving principal untouched.
  • If the lender deposits a repayment check and there are insufficient funds in the borrower’s account, the borrower is hit with even more fees for insufficient funds.

New Yorkers should steer clear of payday loans. If you are struggling to pay your bill:

  • Ask your creditors for more time. Find out what they charge for late payments, finance charges or interest rates since it may be lower than what you might end up paying for a payday loan.
  • Work with a community development credit union or a non-profit financial cooperative, which may provide affordable small-dollar loans to eligible members.
  • Ask for a salary advance from your employer, or borrow from family or friends.
  • Consult social service agencies, they may have programs to help with food, housing and home heating costs.

To stop recurring bank account debits to a payday lender, take the following steps:

  • Contact your bank or credit union and provide an oral or written request to stop payment to the payday lender. Your bank or credit union may require written confirmation of your request. Include your contact information in your request so that the bank or credit union can get in touch with you if necessary.
  • Revoke the authorization for the payday lender to withdraw money from your account. Follow the instructions in any paperwork you received from the payday lender, or send the payday lender a written notice with these instructions: “My authorization to withdraw money from my account is revoked.” Include your contact information.
  • Then send a copy of this written notice (revoking authorization and stating that the lender’s authority to withdraw payments from your account has been revoked) to your bank or credit union.
  • Inform the bank that you would like to contest any prior withdrawals by the payday lender as unauthorized since the payday loan is illegal, void, and unenforceable in New York.
  • After you have made a stop payment request, a lender may continue to try to withdraw money from your account, sometimes using multiple payment systems. You should continue to monitor your account closely. If you see a withdrawal from the payday lender, contact your bank and explain that you previously requested to stop payment and that the lender is still trying illegally to withdraw money from your account.
  • If you need to contact your bank again, discuss any fees that the bank may charge, and make sure the bank knows that the unauthorized withdrawals are due to the repeated actions of an illegal lender. In some cases, banks may waive stop payment fees.
  • In the event that you take the steps set out above and your account is still being debited, you may want to consider closing your account and opening a new one.