Pennsylvania Consumer Advocates Rail Against Advance America’s New Line of Credit
By Desmond CarlislePayday Loan Writer
"This is just another cynical attempt to circumvent the Pennsylvania small-loan cap that prevents companies from fleecing state consumers."
Those were the words of Jim Swoyer, of the Pennsylvania Public Interest Research Group (PENNPIRG), in response to the reemergence of Advance America in the Keystone State.
According to the Pittsburgh Post-Gazette, the state Banking Department is trying to determine if the controversial loan offered by the payday giant — its new "Choice" line of credit allows borrowers up to $500 a month for a $150 participation fee — is legitimate.
Department spokeswoman Heather Tyler called the product "a really bad deal for consumers."
Advance America and similar bad credit payday loan firms earn fees for originating short-term, high-interest loans financed by regular banks, then collect payments for the banks. Generally, the payday loans are unsecured and made for only about 15 days.
The company says its prices reflect the cost of its high-risk business, and that its products help people who have nowhere else get cash quickly. On the flip side, its critics say borrowers often are unable to pay spiraling fees and interest on no fax payday loans, making them a huge detriment and hardly convenient.
The FDIC has also investigated Advance America's practices in Arkansas, while the company was forced to suspend its lending business in North Carolina in December when that state's banking commissioner determined the company's high interest rates were illegal.
