Lynn Elling has a word of advice for anyone seeking a quick loan on the Internet to tide them over to their next payday: Don't.

The 49-year-old resident of Mora, Minn., says she borrowed several hundred dollars from a number of so-called payday lenders last year but ended up paying about $1,200 in interest without ever chipping into the original debt. Debt collectors hounded her until she turned to the Minnesota attorney general's office for help.

"They told me if they're not licensed in Minnesota to stop paying them and to close my checking account so they wouldn't have access to my money," Elling said.

On Tuesday, Attorney General Lori Swanson filed lawsuits against five short-term lenders that made loans to Minnesotans at exorbitant annual interest rates.

It is the second time in 18 months that Swanson has brought litigation against payday lenders -- an $11 billion industry that has faced suits by other states in recent years over alleged abusive-lending practices. Swanson said her office is investigating complaints against additional companies.

"Part of it is a sign of the times," she said. "The reality right now is a lot of people are living paycheck to paycheck and are having a hard time making ends meet. And so these Internet payday loan companies really have taken a foothold."

Swanson said none of the five firms her office sued Tuesday are licensed by the Minnesota Department of Commerce, as required, and each charged borrowers unlawfully high annual interest rates of up to 782 percent. The loans were often illegally extended so that fresh loans were being used to pay down earlier ones, she said. And the interest rate spiraled if loans were not repaid within two weeks.

Firms have no state license

Swanson cautioned Minnesotans against borrowing money from Internet lenders who aren't licensed here. Just four of the 49 small-lenders licensed in Minnesota are based out-of-state.

The defendants named in Tuesday's lawsuits are FloBridge Group, Silver Leaf Management and Upfront Payday, all of Utah, and Integrity Advance and Sure Advance, of Delaware. No one answered a call to FloBridge or Upfront Payday, or responded to e-mails seeking comment. No phone number could be located for Silver Leaf. Neither Integrity Advance nor Sure Advance responded to messages.

Swanson's office obtained judgments last year totaling $165,000 from three such lenders, though it has been unable to find the owners of one of the firms -- Global Payday Loan of Utah -- which she said owes the state $100,000.

Swanson said some Internet-based lenders are distributing applicants' financial data to what appears to be crime rings. That has led to complaints about illegal debt collection activities and concerns about identity fraud.

Fake caller traced to India

Edward Jepson, 68, of Darwin, Minn., said he filled out a couple of applications for short-term loans on the Internet last year and about a month later started getting collection calls on loans he never took out. He said the callers have accused him of passing fraudulent checks and said to pay up or face "serious trouble."

"In fact, I just got one a few minutes ago from some clown. He sounded like he was on the other side of the world," Jepson said. "They just don't give up bugging you."

Diane Briseno said her 20-year-old son started filling out a loan application online, but abandoned it after entering his bank account, Social Security and phone numbers. Then she started getting messages demanding money or he'd face arrest. The caller ID said, "State of Minnesota," so she called the number.

"I asked, 'When did he take this loan out?' They said, Two days ago. And I said, 'How much was the loan for?' And they said, '$700 and he owes $6,000.' I said, 'You've got to be kidding me!'"

The attorney general's office has an ongoing investigation and has traced Briseno's callers to India.

Consumers may check to see if a lender is licensed online at, or by calling (651) 296-6319.

Minnesota caps the interest that licensed lenders may charge and prohibits a short-term lender from extending loans of less than $350 for more than 30 days. Fees also are capped. The cap is $5.50 for loans up to $50; 10 percent plus a $5 fee on loans between $50 and $100; 7 percent (minimum of $10) plus a $5 fee on loans between $100 and $250; and 6 percent (minimum of $17.50) plus $5 fee on loans between $250 and $350. For loans between $350 and $1,000, payday lenders cannot charge more than 33 percent annual interest plus a $25 administrative fee.

Dan Browning • 612-673-4493