This is a civil matter, not a criminal matter. The worst that can happen is they will obtain a money judgment against you, but that is not likely. In New York payday loans are not legal. There are also limits on how much interest can be charged on a loan. Maximum legal interest for an individual is 16.99% and for a corporation is 24.99%. Anything over that is called usury. If the interest rate exceeds 25% it is criminal usury. If the interest rate is found to be usurious then the loan does not have to be paid back. In court they would have to show proof of the loan and they would need something signed by you agreeing to the terms. Demand an accounting of all payments and interest calculations. I doubt they will go to court over such a small amount. You might also want to contact the local authorities about this and have them investigated.
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First, Payday loans are illegal in New York so you may have a defense on that ground if they sue you.
Second, this is not a criminal matter and they can't put you in jail.
I am a former federal and State prosecutor and now handle criminal defense and personal injury/civil rights cases. Feel free to check out my web site and contact me at (212) 577-9797 or via email at Eric@RothsteinLawNY.com. I was named to the Super Lawyers list as one of the top attorneys in New York for 2012. No more than 5 percent of the lawyers in the state are selected by Super Lawyers. The above answer is for informational purposes only and not meant as legal advice.
You can't be sent to jail. This is a civil matter. If they made the call to you in NY, I would argue that the loan and debit is illegal if they sued you.
If you'd like to discuss, please feel free to call. Jeff Gold Gold, Benes, LLP 1854 Bellmore Ave Bellmore, NY 11710 Telephone -516.512.6333 Email - Jgold@goldbenes.com
In addition to the good advice given to you by others who answered your question, you should report this lender to the New York State Attorney General's office. The office's website is www.ag.ny.gov.