Office of Maryland Attorney General J. Joseph Curran, Jr.

November 7, 2001 Media Inquiries: Sean Caine 410-576-6357


Attorney General J. Joseph Curran, Jr. announced today that his Consumer Protection Division has ordered two Maryland companies to stop offering "sale-leaseback transactions" as a cover for small loans with illegally high interest rates, and to pay restitution to consumers who paid interest as high as 730 percent on loans.

The Division determined that B& S Marketing Enterprises, LLC and S&B Marketing Enterprises, LLC, and their president, Louis R. Seo, Jr., and vice president, Frank A. Brown, Jr., violated the state’s Consumer Loan Law by offering loans without being licensed as a consumer lender and charging higher interest than allowed by law, and violated the Consumer Protection Act by deceiving customers about the nature of the transactions.

"These ‘sale-leasebacks’ were nothing more than old-fashioned loan sharking," Curran said. "Not only are they exploiting people with limited resources, they are breaking the law, and we’re putting a stop to it."

The companies operated a "Kash-2-U Leasing" store at 7100 Security Boulevard, Baltimore, and "Cash-2-U Leasing" stores at 4710 Auth Place, Camp Springs, and 11501 Georgia Avenue, Wheaton. The companies advertised that consumers who needed cash quickly could get up to $200 "with no red tape." Consumers were asked to provide the serial number of an item of personal property, such as a TV or VCR. The company "bought" the item, typically for $100. The consumer then signed a lease agreement to pay "rent" on the item, typically $30 every 15 days, until he or she could repay the $100.

The Division determined that the transaction was in fact a loan, disguised as a sale-leaseback in an effort to circumvent the state’s usury law for consumer loans. The effective annual rate of interest in a typical transaction was 730 percent, while the interest rate on consumer loans in Maryland is limited to 33 percent. Many consumers were unable to repay the $100 quickly and continued to pay "rent" for long periods of time, and the companies never informed them that they could relieve themselves of their obligation by surrendering the leased item.

The order requires the companies to pay restitution to consumers who paid "rent" in transactions with Kash-2-U Leasing or Cash-2-U Leasing between January 1994 through January 1997. The order also requires the companies to pay civil penalties of $591,400 and the costs of the investigation.