Payday Loan Times

Check ‘n Go fired back yesterday at a former district manager who last week blasted the southwestern Ohio-based company’s practices, alleging that stores target poor, blacks residents and work to trap borrowers in revolving loans.

The nation’s second-largest payday cash advance lender filed a lawsuit in Washington claiming that former district director of operations Micheal Donovan and the Center for Responsible Lending have conspired to tarnish the company and the entire payday-loan industry.

Check ‘n Go officials accuse them of unauthorized eavesdropping and illegally obtaining confidential information.

The suit specifically accuses Donovan of breaching a confidentiality agreement, breach of fiduciary duty and trade-secret misappropriation.

“It’s unfortunate we have to take this route, but we cannot allow fabrications like this to go unchallenged,” Doug Clark, chief operating officer for Check ‘n Go, said in a written statement. “Our [payday loan company] and its employees deserve to be defended from these false allegations.”

The most stark company allegation is that Donovan has multiple felony convictions and put a false Social Security number on his application. Donovan said yesterday he does not have a felony record and the company misspelled his name when trying to look up criminal information about him, essentially pulling someone else’s background and identification.

Donovan said Check ‘n Go is making “false and reckless statements.”

Donovan last week said that as a Check ‘n Go manager, he trained sales staff to keep customers dependent on the cash advance loans, did not tell customers about extended payment plans and targeted low-income black and Latino neighborhoods.

He was joined by two other former Washington-area store managers, who also spoke unfavorably about company tactics.

The company yesterday denied basing employee incentives on repeat customers, and said that store sites and marketing tactics are not based on race.

Check ‘n Go also has denied Donovan’s statement that he felt pressured to donate to the campaign of company executive John Rabenold, who is running for the Ohio House.

“We take pride in how we serve our customers in Washington, D.C., and throughout the country,” Clark said.

The debate over no faxing payday loan lending regulation is heating up in Ohio. Two bills, one backed by the Ohio Coalition for Responsible Lending and another supported by the industry, should be introduced soon.