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Part of payday loan settlement funding new legal aid consumer project

September 10, 2014

Indiana Legal Services and Heartland Pro Bono Council will be using a portion of a class-action settlement to help Indianapolis residents who have battled payday loan companies or suffered other consumer rights abuses.

With a cy pres award of $73,882, the two partnering organizations will create the new Consumer Advocacy Project this fall to help residents in Indianapolis’ Near Eastside neighborhoods. The nonprofit agencies will collaborate with the John H. Boner Center and its financial foundations staff.

An ILS attorney will represent individuals who have suffered consumer rights abuses and will conduct meetings on consumer law topics. Heartland Pro Bono will work to expand the pool of pro bono attorneys by training private lawyers in the areas of consumer law that frequently impact homeowners in these neighborhoods.

“We have been interested in assisting Near Eastside residents on consumer matters for some time,” said Norman Metzger, ILS executive director. “With strong partners, and now the funding, I am excited over the prospect of helping families achieve greater financial stability by curbing consumer rights abuses such as the victim of payday lending in Indiana.”

The money comes from a settlement in the class-action lawsuit, Edwards v. Apex 1 Processing. Filed in 2010 by Cohen & Malad LLP, the lawsuit alleged that the online payday lender, paychecktoday.com, made loans to more than 1,300 Hoosiers at interest rates exceeding 700 percent ADR, violating Indiana’s payday loan laws.

Marion Circuit Judge Louis Rosenberg selected ILS and Heartland Pro Bono to oversee the project.

“There are few things worse than a business set up to make millions by scamming people who are literally not even living paycheck-to-paycheck,” said Cohen & Malad attorney Vess Miller. “Shortly after we filed this lawsuit, this payday lender decided to close its doors. We’re happy that now it will also pay to help the poor fight back.”

This is the third settlement Cohen & Malad has reached against online payday lenders. Miller estimated roughly $1 million in loans were voided by the Edwards settlement alone.   
 

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