This article has been modified from the way it originally appeared in the Star-Telegram and on Star-Telegram.com to correct the company's intentions on appealing the latest court decision.
Fort Worth-based Cash America, the nation's largest operator of pawnshops, said Tuesday that it will refund millions of dollars to about 14,000 Ohio borrowers taken to court by the lender to collect on defaulted loans.The company, which also makes so-called payday loans, said it recently learned that some employees "did not prepare some court documents properly in many of its Ohio collections legal proceedings." It put the cost of the reimbursements and related expenses at $13.4 million.On Monday, an Ohio state appeals court upheld a lower court's ruling that Cash America's Ohio company, Ohio Neighborhood Finance, made an improper type of loan under state statutes. In a 2-1 decision, the court said the lender could not collect all the interest and fees that it calculated were due.Yolanda Walker, a spokeswoman for Cash America, said Tuesday that the company's action is in no way related to this week's court decision. She said the company separately discovered a problem in its Ohio collection procedures and moved quickly to fix it.Dan Feehan, Cash America's CEO, said in a news release that "we will take care of our customers and we are implementing rigorous measures to do so. We will also institute additional steps to help prevent this problem from occurring again."In 2008, Ohio passed the Short-Term Loan Act, which capped payday loan rates at 28 percent interest and made other restrictions. At the time, Cash America and other lenders said they would leave the state or cease operations there.Instead, Cash America and other lenders began making short-term loans using other state lending statutes. But the Ohio courts ruled that Cash America's license under the Ohio Mortgage Loan Act did not allow it to make loans with the level of fees it charged.Walker said the company may appeal the latest decision."There's nothing wrong with the loans we collected on," she said. "The amounts were owed to us, but there were technical errors on our part."The company said it "will voluntarily reimburse all amounts received through collections legal proceedings" in Ohio dating to Jan. 1, 2008.It also said that, except for appealing Monday's court ruling, it will stop collections related to court judgments and seek to vacate prior judgments. It said it will also notify credit bureaus of the actions.Jim Fuquay, 817-390-7552Twitter: @jimfuquayHave more to add? News tip? Tell us
