LI debt collector pays $10G settlement: AG

An exterior image shows the headquarters of Forster An exterior image shows the headquarters of Forster ... Garbus at 60 Vanderbilt Pkwy. in Commack. Photo Credit: Google, 2012

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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.

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"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.

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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.

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