Lending battle comes to Clayton

By Justin Boron

Attorney and former Gov. Roy Barnes said he is trying to stop predatory, "payday" lenders from sidestepping state law.

One way may be with lawsuits that could drain the lenders' pocketbooks of the money, he says, they are scamming from Georgia's poor.

"If a jury adequately punishes them for some of their transgressions, it will get their attention," he said.

The fight, which has been waged in courts and the state legislature in the past, has now come to Clayton County, where there is an abundance of cash advance and loan businesses.

Barnes is representing College Park-resident Melony Reid in a lawsuit filed last week in the county Superior Court. The complaint alleges that USA Payday Cash Advance violated Georgia law when in April it made Reid, a nursing student, sell her computer to them for a $500 loan. With no property ever actually changing hands, the company then rented the computer back to her, Barnes and other attorneys say in the complaint.

After a few loan extensions, she racked up $675 in finance charges on top of the initial loan.

Atlanta-based attorney David Crockett said he had not received the complaint and was not officially representing anyone named in it as of Tuesday.

But he told the Associated Press he denies the charges and that lease-transactions are a "time-honored method" to raise cash.

"We will expect to contend those claims vigorously," he said to the Associated Press.

Crockett said he is currently defending several companies named in another lending-related lawsuit filed by Barnes in DeKalb County and expects to defend the ones named in the most recent complaint.

Reid's attorneys say her transaction with the lender is evident of a new tactic that lenders are using to defy state legislators, who passed Senate Bill 157 to punish predatory lenders with heavy fines and possible prison time.

"They're kind of morphing their practice," said John Bevis, an attorney working with Barnes in the suit.

The lender now disguises the loan as a lease agreement for the borrower's own property. The net effect is loans of more than 1,000 percent interest, according to the complaint.

Barnes, who before becoming governor litigated on the side of consumers in home mortgage cases, said lenders are just coming up with "new schemes for old ideas."

Barnes' firm also has filed eight class action suits last year against 60 defendants affiliated with lending, Bevis said.

The most recent complaint cites several defendants, some of whom he said appear to register their business at the same address in Atlanta.

Dexter Matthews, the president of the Clayton County Branch of the NAACP, extolled Barnes' effort against what he said is a growing problem in the county.

"(It's) excellent," Matthews said. "These places take advantage of people that can least afford to be taken advantage of."