Lawsuit Against Payday Lending Operation Given Class-Action Status

A Nevada judge granted class-action status this week to a lawsuit against a Tennessee-based payday lending operation accused of spamming thousands of people with unwanted text messages.

Carey V. Brown operates Credit Payment Services and operated several affiliates - including MyCashNow.com, DiscountAdvances.com, Leadpile and PayDayMax.com.  The businesses allegedly violated the Telephone Consumer Protection Act by spamming consumers with text messages containing payday loan offers. The companies were incorporated in Nevada but operated out of Chattanooga, Tenn. Some of the affiliates are closed but it wasn't immediately clear how many.

U.S. District Judge Andrew Gordon granted class certification to individuals who received a spam text message between Dec. 5, 2011 and Jan. 11, 2012, from one of three specific telephone numbers. Judge Gordon denied two motions to dismiss the case. The benefits of the text messages - leads for potential payday customers - flowed toward the companies controlled by Brown, Gordon wrote in his reasoning behind the ruling.

Brown has denied that his companies had anything to do with unwanted text messages from the phone numbers. He has claimed that the actual spammer was someone located in Ohio and he does not know why that person or operation has not been sued.

While payday loans have been under regulatory scrutiny for putting consumers in an endless cycle of debt as the loans roll over and fees grow higher, attorneys in the case against Brown only took issue with the way his companies solicited customers, specifically using millions of automated text messages. In some cases, those text messages cost the recipients money to receive. The texts contained links that redirected recipients to websites controlled by Brown.

Last August, a top New York State regulatory agency sent cease-and-desist letters to 112 banks and 35 lenders that offer or facilitate payday loans to consumers online. Brown and his businesses were named in the letters from the New York Department of Financial Services.