Company backed by Montel Williams faces crackdown #used #auto #loan #rates

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Company backed by Montel Williams faces crackdown

Montel Williams, a former daytime talk-show host, has agreed to withdraw his endorsement of MoneyMutual s payday loans to New Yorkers. (Photo: Jeff Katz, Showtime)

An earlier version of this story incorrectly identified MoneyMutual as a lender. MoneyMutual connects lenders with consumers.

A New York banking regulator on Tuesday blasted loan finder MoneyMutual for hiding behind its celebrity endorser, Montel Williams, in wrongfully marketing loans with sky-high interest rates — some exceeding 1,000% — to struggling New Yorkers.

Benjamin Lawsky, superintendent of New York’s Division of Financial Services, said MoneyMutual, a unit of marketing company SellingSource, has agreed to pay a $2.1 million penalty and cease its payday loan lead generation activities in the Empire State, where such loans are illegal.

Williams, a former day-time talk show host, has also agreed to withdraw his endorsement for paydays through MoneyMutual to New York consumers, Lawsky said.

Payday loans offer small amounts of money at high interest rates on the condition that it will be repaid when the borrower receives their next paycheck. MoneyMutual, for example, advertises loans on its website at interest rates of 261% to 1,304%, Lawsky said.

Lawsky took the company, which advertises payday loans online, to task for marketing to New Yorkers, where such loans are illegal.

Lawsky said MoneyMutual’s parent company, SellingSource, used William’s reputation to improperly push payday loans to New Yorkers. When seeking to reassure borrowers that the loans were safe, the company would say, “Montel Williams has endorsed MoneyMutual and would not do so if it were not a legitimate company,” according to Lawsky.

Williams’ spokesman Jonathan Franks said DFS “has made no finding of a violation of law by Mr. Williams.”

Williams “is not blind to the problems of the industry,” but “we stand by his overall endorsement of Money Mutual,” Franks said.

“As he has said publicly many times, Mr. Williams himself utilized short term lending while attending the Naval Academy on more than one occasion and paid those loans back on time,” Franks said.