/ CompleteRegistration // Track when a registration form is completed (ex. complete subscription, sign up for a service) fbq('track', 'CompleteRegistration');
Pay Day Lending

Payday Lenders Often Trap Borrowers

Over the past ten years Wallace & Graham has represented clients who have sued “payday lenders” who make loans out of stores and over the internet that have high interest rates.  These loans can often trap borrowers in a cycle of debt.

In 2004, Wallace & Graham filed lawsuits against some of North Carolina’s largest payday lenders – including Advance America, Check into Cash, and Check ’N Go.  The lawsuits claimed that the lenders exploited poor people by luring them into quick loans that carried very high interest rates of up to 500 percent.

The lawsuits were filed in New Hanover County Superior Court by Wallace & Graham along with three public interest organizations – the North Carolina Justice Center in Raleigh, NC, the Financial Protection Law Center in Wilmington, NC, and the Public Justice nonprofit law firm in Washington, D.C. In addition, the firm of Hartzell & Whiteman in Raleigh, NC and Richard Fisher in TN helped with the cases.

The complaints alleged that since 1997, these companies were targeting low- and moderate-income North Carolina families by offering a check cashing service known as “deferred-deposit” or “payday” loans. These loans were marketed as a quick, easy way to obtain cash without undergoing a credit check. For more information call800.849.5291 or email us, today!   

The way that the Plaintiffs claimed that these lenders worked was as follows:

  1. A customer wrote a check for the amount borrowed (usually between $200 and $500).
  2. The payday lender kept the check until the customer’s next pay day, two weeks later.
  3. The customer was charged a high fee for this loan.
  4. In a typical transaction involving a loan for $425, for example, a customer wrote a check for $500, which included a $75 fee.
  5. On the next payday, the customer had to pay $500 to get the check back, or pay $75 to extend the loan for another two weeks.  Otherwise the lender would deposit the check which would lead to “bounced check” fees if the customer did not have enough money in their bank to cover it.
  6. The fees for consumers reflected interest rates of over 200%, 300%, 400% or more.
  7. Many borrowers could not pay off the loan and had to choose the "roll-over” option.  This meant they were stuck in a cycle of coming and paying fees every two weeks.


After the cases were brought to Court, the payday lender companies claimed that an arbitration clause banned class actions. The Trial Court in the three lead cases found that the class action ban was enforceable and that the cases had to go to arbitration. We appealed the decisions and then the North Carolina Court of Appeals said the cases could go on in Court after all. 

The parties then reached a settlement that provided refunds and settlement checks to thousands of North Carolina consumers, in those three cases.

Two other payday lending cases are still going on in Court.  The lawyers for the consumers in these cases include J. Jerome Hartzell of Hartzell & Whiteman in Raleigh, NC, Mona Lisa Wallace and John Hughes of Wallace & Graham in Salisbury, NC, Mal Maynard from Wilmington, Carlene McNulty in Raleigh and Richard Fisher of Cleveland, TN. 

In 2006, the North Carolina Attorney General announced that some of the largest payday lenders in North Carolina have agreed to stop doing business in our State.   The payday lenders that had stores in North Carolina shut down their stores and left the State.

However, now payday lenders have been using the internet.  Nowadays there are hundreds of different payday lenders offering high-interest loans on the internet.  In spite of the fact that the North Carolina Attorney General has said payday loans are illegal, on the internet they are still being offered.

Our law firm is currently representing consumers who received costly payday loans over the internet.  

Recent News

The Importance Of Selecting An Available Arbitration Forum

The Eleventh Circuit affirmed a Florida district court’s denial of Cashcall’s motion to compel arbitration, as the forum selected in …  [ more ]


What is a payday loan?

A payday loan is a loan for typically between $100 and $5000 with a very high rate of interest or a high fee.  Under North Carolina law, it is illegal to make someone a personal loan of less than $25,000 at an interest rate greater than 16% per year.

What is an internet loan?

An internet loan is a small loan offered over the internet which comes with a high interest rate or a high fee.  North Carolina limits the amount of interest and fees that a lender can charge.   

I think I might have a claim. Can I call you and see what you think?

Of course!  If you think you might have a legal claim, one of our attorneys would be happy to talk to you, and there is no charge for the consultation. Please call Wallace & Graham at (800) 849 - 5291 or email us. 

If I call you, is it going to cost me anything?

The consultation is free.  During the call, we will try to determine whether you have a legal claim and whether you have the evidence to pursue it in court.  If you do, we will then talk to you about the next steps.

What can I expect if I hire you?

We always work on a contingent-fee basis.  We will go over the details of this arrangement before you hire us, but the main points are: you only owe us money if your case wins.  We front the expenses and put in all the time on your case.  If you win, we recover our expenses and a fee for our time from your judgment or settlement.  If you don't recover, you don't owe us anything.                            

Typical consumer protection cases are for relatively small amounts of money, which means they are only viable claims if they can be brought as a class action.  During a free consultation, our attorneys will be happy to explain the criteria for bringing a class action and help you determine whether you qualify.

I got a payday loan. How much do I have to pay back?

Nothing.  The law in North Carolina is that it is a crime for a payday lender to collect even the principal amount of the loan.  However, before you refuse to pay any asserted debt, it is a good idea to get an opinion from a lawyer about the legality of the debt.  You can always call Wallace & Graham’s predatory lending attorneys at (800) 849 - 5291 for a free consultation.  You can also contact the North Carolina Attorney General’s Consumer Protection Division at (877) 566-7226 or (919) 716-6000 to get a second opinion.

The lender says that the payday loan I got is legal because the lender is an Indian Tribe or is located in another state. Are they right?

Call Wallace & Graham for a free consultation and we can help you figure this out.  If the loan was made in North Carolina, it is not legal.  Some lenders claim to be immune from being sued for their criminal conduct because of Indian Tribal immunity, but that is not sufficient as an argument that the loan is legal.  You can always call Wallace & Graham’s predatory lending attorneys at (704) 633-5244 for a free consultation.  You can also contact the North Carolina Attorney General’s Consumer Protection Division at (877) 566-7226 or (919) 716-6000 to get a second opinion.

I got a payday loan, and then I couldn’t pay, and now I’m getting phone calls all the time from people threatening to sue me, have me arrested, and garnish my wages. What should I do?

It’s not a crime to just owe somebody money, so you can’t be arrested for it.

It is illegal for someone who is calling you to collect a debt to do any of the following:

  1. Harass, oppress, or abuse you by threatening violence, using foul language, or repeatedly using the phone to harass you such as by calling late at night or repeatedly during the same day
  2. Call you at work after you have informed the caller that you are not allowed to receive personal calls at work
  3. Claim to be an attorney or government representative (unless they are actually an attorney)
    • To our knowledge, the FBI and NSA never call anyone to collect a debt.  If someone calling you claims to be from the FBI or NSA trying to collect a debt, they are almost certainly lying.  Demand proof, and if you’re still not sure, call the North Carolina Attorney General’s Consumer Protection Division and the Federal Trade Commission.
  4. Falsely claim that you have committed a crime
  5. Tell you that they will garnish your wages or seize your property, unless they are allowed by law to do so and intend to do so (typically, this means only if they have already sued you and won)
  6. Other behaviors prohibited by the Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), or Telephone Consumer Protection Act (TCPA)

The laws prohibiting these behaviors are enforced by the Federal Trade Commission (FTC) and Federal Communications Commission (FCC).  If you are receiving harassing calls, report the callers to the FTC and the FCC.

Whenever you receive a debt collection phone call that you suspect may violate the FDCPA, FCRA, or TCPA, demand, write down, and refuse to identify yourself or answer any questions until the caller has given you the following information:

  1. the caller’s name or identification number,
  2. the physical location of the caller,
  3. the name of the company they work for and the state wherein it is incorporated
    • (note that all real company names end in something like LLC, Co., Inc., Ltd., or something along those lines – make the caller give you the real name of the company they work for),
  4. the name of the company on behalf of which they are calling and the state wherein it is incorporated,
  5. the address you would use to serve legal documents on the company making the call,
  6. the address you would use to serve legal documents on the company on behalf of which they are calling,
  7. the physical address of the company making the call,
  8. the physical address of the company on behalf of which they are calling, and
  9. their phone number.
  10. also, write down the date and time of the call, and anything the caller says during the call that you believe is illegal.

It’s just common courtesy for a caller to identify himself or herself first.  Insist on it, and do not let the caller weasel out by hiding behind fictitious names.  Get the full legal name of not only the caller, but the company the caller is calling on behalf of.

If you are experiencing illegal debt collection phone calls, and you can identify both the entity calling you and the creditor, please call the predatory lending attorneys at Wallace & Graham at (800) 849-5291 for a free consultation.  It may be possible to bring a class action lawsuit against the debt collector or the creditor for illegal debt collection practices.

I stopped making payments on a payday loan and now they’re reporting it on my credit. What can I do?

If the loan was a payday loan made in North Carolina, then it was illegal and there is no debt.  Therefore it does not belong on your credit report.  Ask the credit reporting agency about their dispute procedures.

If you need help determining whether the loan was legal, feel free to call Wallace & Graham at (704) 633-5244 for a free consultation.