Would It Make A Loan Shark Blush?

The institutions are licensed to provide “payday loans”, in which borrowers — usually low-income families living paycheck to paycheck — give the lender a post-dated check in exchange cash.

But the lawsuit charges that Check ‘n Go illegally offers short-term loans for up to $1,500 with annual percentage rates exceeding 400 percent. Check ‘n Go has questionable arrangements with online affiliates and First Bank of Delaware, also named in the suit, to skirt state law, the suit alleges.

According to the complaint, Money Mart marketed an identical loan in association with First Bank of Delaware until earlier this month, when the company quietly ended the practice in its storefront locations.

Company marketing materials, however, indicate Money Mart plans to launch an Internet version of the same product later this month, according to the complaint. Neither Check ‘n Go nor Money Mart is licensed to provide short-term loans or offer installment loans in the same place of business as payday loans.

Herrera’s complaint says the two institutions are engaging in bait-and-switch marketing practices that constitute deceptive advertising.