Illinois Fines Payday Loan Firm For Violations
By Paul RizzoPayday Loan Writer
Thursday, the Blagojevich administration and Attorney General Lisa Madigan took action against a payday loan company that they allege is in violation of numerous consumer protection laws.
In a statement, AmeriCash Loans LLC, of Des Plaines, Ill., said that a computer error caused it to make a mistake, and apologized for the error.
According to the Chicago Sun-Times, the Illinois Department of Financial and Professional Regulation issued an order to fine AmeriCash $190,000 for charging higher interest than state law permits on payday loans.
Consumer advocates accuse payday lenders of preying on the working poor with their short-term, high-interest loans, but lenders say they are providing a necessary service and meeting a market demand.
Examiners for the department found that AmeriCash allegedly issued 19 loans with interest rates of 521 percent, or 28 percent higher than allowed by the state's payday lending law.
"We have copies of legal documents that violate the law," said Susan Hofer, of the Illinois Department of Financial and Professional Regulation.
The law limits the number of times a loan can be rolled over and gives customers an interest-free payback option.
"Too many people who apply for short-term financial help find themselves in a devastating spiral of debt," Gov. Rod Blagojevich said in a statement.
AmeriCash, which has 10 days to request an administrative hearing to contest the order, says it has rectified the problem, and didn't access consumer bank accounts. Nor did it collect any money based on wage assignments, according to the no fax cash advance firm's General Counsel, Bonnie Schoenberg.
AmeriCash said it was testing a new product intended to be "a purely unsecured loan that would not include wage assignments."
According to the company's statement, as soon as it was discovered that our systems were automatically, incorrectly including wage assignments, they pulled the product immediately and began contacting payday cash loan customers to notify them of this error.
