A local debt collector has agreed to stop seeking payment on payday loans, and to pay $10,000 to the office of state Attorney General Eric T. Schneiderman, officials said Thursday night.
Forster & Garbus LLP of Commack has reached a settlement with Schneiderman that requires it cease filing legal actions to collect on payday loans and to obtain written proof that loans aren't of the payday type before pursuing debtors.
"Debt collection firms must make certain that the underlying loan is not a payday loan before filing a lawsuit, and they will be held responsible if they fail to do so," Schneiderman said in announcing the Forster & Garbus settlement. "Ignorance is no excuse."
A Forster & Garbus executive didn't immediately return a voice-mail message left for him Thursday night at the firm's Vanderbilt Motor Parkway office.
Many payday loans are illegal because they carry interest rates of 100 percent or more -- far above New York State's maximum of 16 percent for most lenders not licensed by the state.
Forster & Garbus was hired by NCEP LLC, an out-of-state company, to collect on loans taken out by New York residents. At least five of Forster & Garbus' collection attempts involved payday loans, according to Schneiderman.
Since becoming attorney general in 2011, Schneiderman has taken action against six debt collection agencies over payday loans. Together, they have paid more than $319,000 in restitution and penalties.