Banner: Maryland Attorney General J. Joseph Curran, Jr.
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For Immediate Release
August 15, 2002
Contact: Sean Caine, 410-576-6357


Attorney General J. Joseph Curran, Jr. announced today that the Circuit Court for Baltimore City has upheld a decision by his Consumer Protection Division that two Maryland companies were engaging in illegal and usurious loans that were disguised as "sale-leasebacks."

The Circuit Court held that there was "overwhelming" evidence that the transactions offered by the companies under the trade names "Kash-2-U Leasing" and "Cash-2-You Leasing" were nothing more than disguised loans. The companies, B& S Marketing Enterprises, LLC and S&B Marketing Enterprises, LLC, were not licensed to make consumer loans, and the loans that were offered were at an annual interest rate of 720 percent, which far exceeds the 33 percent annual interest allowed by the Maryland Consumer Loan Law. The companies disguised their loans as sale-leasebacks in an effort to avoid the consumer loan law and Consumer Protection Act.

"There has been a long history of predatory lenders trying to get around consumer protection laws and charging outrageous interest on their loans, and this current ‘sale-leaseback’ scheme is a reincarnation of one of the oldest schemes," Curran said. "Maryland is at the forefront of states working to prevent predatory lending, including payday loan sale-leaseback schemes."

The two companies operated three stores in Baltimore, Camp Springs, and Wheaton. They 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 loan.

The Circuit Court upheld the Division’s order to the two companies to pay restitution to consumers who paid interest on the loans (which was disguised as "rent") between January 1994 and January 1997, and to pay civil penalties of $591,400 and the costs of the Division’s investigation. The Circuit Court remanded the Division’s order back to the Division to clarify its order to ensure that disguised loans in any form would be prohibited.



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