Series of Illinois Payday Loan Companies Fined
By J.J. CameronPayday Loan Writer
It seems as though payday loan violations are in the air this week.
We reported on trouble in Nebraska earlier today - and now five Illinois cash advance facilities in Illinois have been fined by the state for issuing loans prior to obtaining licenses, state officials said Tuesday.
According to The Journal-Standard, Affinity Credit Services in Freeport was fined $71,000 by the Illinois Department of Financial and Professional Regulation (DFR). Its offense? Issuing 71 loans before its license took effect Aug. 2.
Illinois law requires that each payday advance facility be separately licensed after meeting the state's financial standards under the Consumer Installment Loan Act.
“We have laws in Illinois. We require people be licensed before they issue loans,” IDFPR spokeswoman Susan Hofer said.
The owner of the Freeport facility, Chicago resident Mike Dambrose, 45, said it's all a misunderstanding.
“I'm raised by a Fortune 200 company to do things right. You just do the right things,” Dambrose said.
Makes sense to us.
When he applied for his regular and faxless payday loan license in June, Dambrose said it was approved. But he thinks the person who approved his license left his job and the paperwork was not processed completely. Dambrose owns all five facilities under scrutiny.
“DFR came in two weeks ago and they audited every store that I own in one day. The major problem they found was that my license said August 2, but I've been operating since July. But I was approved license-wise in June,” he said.
A payday loan examination: The DFR examined Affinity's operations following an unrelated consumer complaint about the company, and subsequently learned about the 273 low fee payday loans that had been issued, Hofer said. She said the complaint that triggered the investigation was about an alleged high interest rate on a loan.
“The person who heads the consumer loan section heard about the complaint and realized she had just approved that company's license and realized that loan - and many others - had been issued prior to the license being approved,” Hofer said.
The DFR has assessed a fine of $1,000 for each loan that was improperly issued, meaning the stores were fined $273,000. Ouch!
Affinity purchased the business in May 2006 from AmeriCash Loans, a licensed CILA lender, and it began doing business before becoming licensed on Aug. 2, she insisted. The DFR has the authority to refer the cases to the state attorney general, who can prosecute the owners for unlicensed bad credit payday loan business practices.
When the ownership of a store changes, the license of the seller is no longer valid at the facility, and a license must be obtained by the new owner. Hofer said in its sales contract, Americash made it clear that Affinity was responsible for obtaining valid CILA licenses for these stores.
Tuesday's order takes effect immediately, unless Dambrose requests, in writing, a hearing within 10 days. In the event a hearing is requested, the order will be stayed until a final administrative order is entered on the cash advance loan question.
