The Attorney General of Arizona, Terry Goddard, has payday lenders in his sights. Goddard has filed suit against QC Holdings Inc., which is the company that operates the Quik Cash payday lending stores located in Arizona. The state would like for the company to pay as much as $5 million in restitution fees. In addition, the AG is asking that a Tucson court set aside debt collection judgments the lender has secured against defaulting borrowers. On top of all of that, Goddard is asking that Quik Cash be shut down altogether in the state and no longer able to offer payday loans to the citizens of Arizona.

Quik Cash has 38 retail locations throughout the state of Arizona. The company reported a $4.7 million profit in the third quarter of 2009. The company’s headquarters are based in Overland Park, Kansas, and the company has locations in other states. Altogether, they operate a total of 563 branches in 24 different states, and they lend approximately $1.4 billion to customers each year. The revenue figures for 2009 was up from the same quarter in the previous year.

The authorities in Arizona are accusing the company of engaging in deceptive practices. They suggest that Quik Cash has been deceptive by filing their collections lawsuits in locations that are far from where the debtors live. Hundreds of collections lawsuits filed by the company were filed in Pima County. State law in Arizona, however, requires that small claims lawsuits must be filed near where the defendant lives or where they took out the loan.

Quik Cash filed in Pima County because it reduced their costs for collections. It also made it easier for the company to get a judgment against their payday loan customers, followed by wage garnishments. The state argues that customers who live in rural areas, or who live in cities hundreds of miles away from Pima County, are at a severe disadvantage.

Goddard described the practice as setting up “a veritable assembly line of default judgments” by doing so.

QC Holdings released a statement that it is attempting to comply with Arizona law, and is willing to cooperate with the state as it investigates the situation. A judge temporarily granted a preliminary injunction to prevent the company from filing collections lawsuits in the incorrect courts or further pursuing cases that are in the wrong courts.