Attorney General's News Release

July 15, 2004

Nixon: KC business fronted phony electronics-leasing program to hide excessive interest rates

Kansas City, Mo. — Attorney General Jay Nixon today sued a business that took advantage of hundreds of consumers by purporting to buy their televisions and stereos, then leasing the equipment back to the consumers at exorbitant rates. At a news conference in Kansas City, Nixon announced a lawsuit alleging Missouri Marketing Enterprises (MME) violated several state laws, including operating an unlicensed small loan business and charging excessive interest and fees on consumer loans.

MME operated two offices in Missouri under the name Cash-2-U Leasing, one at 1734 E. 63rd St., #207, Kansas City; the other at 10449 St. Charles Rock Road., St. Ann. The lawsuit, filed in Jackson County Circuit Court, states the unlawful activities took place at both offices during 2003.

"This company created a scheme to trick cash-strapped consumers into thinking they could sell their electronics and still enjoy using them," Nixon says. "In fact, the consumers fell victim to predatory lenders and watched their money quickly evaporate."

The lawsuit alleges MME disguised Cash-2-U Leasing as a sales lease-back business that would buy a consumer's personal items then lease them back to the consumer. Nixon alleges Cash-2-U Leasing never saw the electronic equipment of most of the consumers. The consumers simply listed their personal items, then received cash. Nixon says MME created this scheme to circumvent state statutes regarding unsecured loans. The lawsuit also says that, from May 31, 2003, to March 3, 2004, MME ran the Cash-2-U Leasing offices without a license to operate a small loan business in the state of Missouri.

Nixon alleges MME violated the law regarding small loan businesses in many ways, including:

• Failing to disclose interest rates and fees associated with loans.
• Charging accumulated interest and fees in excess of 75 percent of the initial loan amount.
• Failing to reduce the principal amount of the loan by at least 5 percent of the original amount of the loan.
• Renewing consumer loans more than six times on at least two occasions.

MME received licenses to operate small loan businesses on or about March 4, 2004. Nixon says Cash-2-U Leasing then changed its name to Cash-2-U Payday Loans and converted some or all of its personal property lease agreements to payday loans.

The lawsuit also alleges MME violated Missouri's consumer fraud laws by deceiving consumers, misrepresenting its services and making false promises.

The Attorney General is asking the court to declare all personal property lease agreements between consumers and MME void; to order MME to provide restitution to consumers who were victims of the company's deception; and to order MME to pay a penalty to the state of $1,000 per violation.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818