High Rates, Low Risk

There was little risk in lending money to Larry Long. The maker of Vioxx, Merck, had already agreed to settle the Vioxx class action. The projected payouts were relatively easy to calculate: Mr. Long’s lawyer estimated that he would eventually get a total of about $80,000.

Oasis still imposed its standard pricing: 50 percent of the loan amount if repayment was made within six months, with regular increases thereafter.

Mr. Long and his wife resented the high cost, but they had run through their savings. Mr. Long was legally blind and needed regular dialysis. His wife, Deborah, had left work to care for him. They borrowed $3,000 in February 2008, $3,000 in March and $3,150 in July. “We were having a crisis, and they knew we were having a crisis,” Mrs. Long said. “They take advantage of people that are in need.”

Oasis made loans on similar terms to 43 Vioxx plaintiffs, totaling about $224,000.

Orran L. Brown, the Virginia lawyer appointed to disburse the settlement, described the cost of the loans as “unconscionable.”

“There was very little risk of nonrecovery, but they were charging full freight,” he said.

But Gary Chodes, the company’s chief, said the performance of the Vioxx loans showed why Oasis must charge high rates. Eight of the 43 borrowers failed to qualify for the settlement, he said, and an additional seven did not win enough to pay the full amount that they owed.

The company waived its claim against the Longs after the couple complained to the federal judge overseeing the Vioxx case. Mr. Chodes said that Oasis acted out of compassion for the couple’s personal difficulties, but that the company had done nothing wrong. The Longs asked for money and Oasis clearly explained its terms, Mr. Chodes said. He provided copies of documents on which Mr. Long had recorded his thanks for the loans.

“We were there when he needed help with his house note and his car note and his medical bills. And he was plenty grateful at the time,” Mr. Chodes said.