Nation’s Biggest Payday Advance Lender is Sued
Mere days after seemingly making the proper PR move and halting payday advances to the military, Advance America is facing a public relations nightmare.
The Pennsylvania Department of Banking has filed a Commonwealth Court suit against the cash loan company, saying it provided lines of credit without a license and exceeded state caps on interest and fees.
Advance America, of Spartanburg, S.C., is the country's biggest cash advance lender and operator. It has 100 branches in Pennsylvania. It offered a $500 line of credit in Pennsylvania that was ostensibly at 5.98 percent, but required a $149.95 monthly fee and a $20 minimum monthly payment, the Governor's Office said.
"Under this outrageous product, a person who borrows $500 and makes minimum monthly payments ends up paying back more than $4,000 over about two years," Gov. Ed Rendell said.
Advance America and other companies stopped making traditional, short-term fast cash loans this year because of new regulations from the Federal Deposit Insurance Corp.
"Advance America may not be making payday loans in Pennsylvania anymore, but they are still trying to take advantage of hard-working, hard-pressed families," Rendell said.
An Advance America representative could not be reached immediately for comment, but we'll keep you posted on this cash advance payday loan story as it develops.