PHOENIX - The Arizona Attorney General's Office filed suit Friday against a major payday lender, accusing the firm of collection practices designed to defraud hundreds of borrowers - especially those living in rural areas.

According to the lawsuit, Quik Cash has engaged in "a widespread deceptive pattern" of filing suit against those who default on their payday loans in Pima County justice courts, "far from where the consumers lived or where the loans occurred."

Late Friday, Pima County Superior Court judge Kenneth Lee issued a preliminary injunction barring the company from filing collections cases in courts away from where the borrowers live or the loans were made. Assistant Attorney General Vince Rabago said that injunction, which company attorneys agreed to, remains in place until there is a trial.

Tom Linafelt, spokesman for QC Holdings Companies, the parent firm of Quik Cash, said it has always sought to comply with Arizona law and was "unaware of this administrative issue."

He said his company is cooperating with the Attorney General's Office and launching its own internal inquiry.

In his filing, prosecutor Rabago said Quik Cash promises its borrowers that their contracts will be governed by Arizona law. "But the company then repeatedly and knowingly violates Arizona law by suing hundreds of customers in an improper court venue - the justice courts of Pima County - thus depriving Arizonans throughout the state of their legal privilege to have the lender file the case in a local justice court near them," he wrote.

Rabago said this does more than make it more expensive for borrowers to fight the lawsuit. He said it makes it more likely that a borrower will not respond to the lawsuit because the cost of fighting it in Pima County - or even hiring an attorney to ask that the case be moved locally - makes no sense given that the amounts of money involved are so small, "effectively depriving consumers of having their day in local court."

Quik Cash files not only default judgments but also wage garnishments "in the same distant venue," Rabago said.

The lawsuit asks a court to set aside the judgments Quik Cash got against rural residents and reimburse the borrowers anything the firm collected through the "improper" methods. And the state wants $10,000 for each violation, a figure Rabago said already tops $5 million.

The allegations come at a politically disadvantageous time for the payday loan industry.

Companies are trying to persuade lawmakers to approve legislation - and Gov. Jan Brewer to sign it - to allow their operations to continue in Arizona beyond June 30. This is their last chance: Prior legislative efforts have fallen short, and voters last year rejected an industry-financed initiative by a 3-2 margin.

This lawsuit, however, does not claim that payday lending itself is fraudulent. Instead, Rabago said, the company has instituted "aggressive new collection initiatives and strategies" following several years of losses and decreases in collections.

Rabago specifically claimed that it was the company's "deceptive collection litigation" in Arizona that helped reduce its losses or turn around its collections rates.

The payday loan industry operates by providing short-term loans of up to $500 for fees that can range up to $17.65 for each $100 borrowed.

So someone who wants to borrow $500 writes out a check for $588.25. That person gets the $500 in cash and the lender promises not to try to cash the check for two weeks.

The collection process occurs when a borrower doesn't have the money at the end of that time to make the check good.

Attorney General Terry Goddard campaigned against the industry-financed initiative, saying Arizona should not allow payday lending to continue in Arizona. He said borrowers get "caught in a cycle of indebtedness" when they cannot pay off their short-term loans and have to take out new ones, paying additional fees.