Business

Lawsky cracks down on lender backed by Montel Williams

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Published March 10, 2015, 1:41 p.m. ET

Money talks — unless you’re Montel Williams.

The former talk show host will stop endorsing MoneyMutual’s payday loans in the Empire State after the company was slapped for illegally marketing the high-interest, short-term loans to struggling New Yorkers.

The company will pay a $2.1 million fine, stop its online “lead generation” business in state and provide additional disclosures to customers as part of a settlement Tuesday with the Department of Financial Services.

MoneyMutual, which is the business name of Selling Source, sold personal information of about 800,000 New Yorkers to companies making online payday loans, which are banned in New York, the DFS said.

“Using Mr. Williams’s reputation as a trusted celebrity endorser, MoneyMutual marketed loans to struggling consumers with sky-high interest rates — sometimes in excess of 1,300 percent — that trapped New Yorkers in destructive cycles of debt,” Ben Lawsky, superintendent of the DFS, said in a statement.

Williams, whose talk show ended in 2008, has hawked the company in commercials since at least 2010.

“It’s your trusted source to over 60 lenders to get you up to a thousand dollars fast,” Williams, 58, said in the commercials. MoneyMutual would even be able to give borrowers “breathing room ’til payday,” he said.

Williams left out that annual interest rates could climb as high as 82 times the legal limit for interest rates in New York, and that the company targeted repeat customers for the usurious loans, the DFS said.

The DFS has been cracking down on payday lenders since 2013. Last year, the regulator signed up five banks, including Bank of America and JPMorgan Chase, to use a database of suspected payday lenders to bolster their due diligence and stop doing business with the companies.

“The DFS has made no finding of a violation of law by Mr. Williams, and the agreement does not require him to pay any fines or penalties. Mr. Williams and his staff have cooperated fully with the DFS throughout the course of the investigation,” Williams’ spokesman, Jonathan Franks, said in a statement.

“We stand by his overall endorsement of Money Mutual, with the exception, pursuant to the Consent Order, of the State of New York,” he added.