Payday Lending and Predatory Lenders in Illinois

If you are in substantial debt in the Chicago area and are living in a paycheck-to-paycheck cycle, you may have taken out a payday loan to make ends meet. While payday lending is illegal in a number of states due to the predatory nature of these loans, it remains legal in Illinois. As a result, many debtors in the state have used payday lenders, and far too many of those borrowers cannot repay what they owe. According to a recent article from Progress Illinois, consumers have filed complaints about payday lenders in the state, illuminating a need for federal rules that address harmful lending practices.
Predatory Payday Lenders and Protections for Consumers
Due to the perceived predatory nature of payday loans, twelve states in the country have banned these lenders from operating completely, according to a fact sheet from loans.org. The states that currently have laws prohibiting payday lenders from operating include Arkansas, Arizona, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, North Carolina, Vermont, and West Virginia. Aside from a handful of states, the remaining ones not listed have laws that work to limit the harms of payday lending in some form. Legal limitations on payday lenders can include limitations on interest rates or fees that can be charged, and/or limitations on “rolling over” loans. When loans get rolled over, the lender adds new fees, which can put a borrower in an endless cycle of debt.
What protections do Illinois residents have? According to a fact sheet from the Illinois Attorney General’s Office, Illinois residents have had significant protections against payday lenders since 2007. These protections include:
  • Limitations on rollover loans;
  • Requirements that loans be based on the borrower’s ability to repay the loan; and
  • Creation of the “small consumer loan,” which is a less expensive than a traditional payday loan.
Despite these protections, however, the Illinois Attorney General’s Office emphasizes that “consumers must exercise caution when deciding whether to take out a loan to meet their emergency expenses,” as “the cost of short-term borrowing in Illinois remains very high.”
Complaints Against Payday Lenders in Illinois
As the Progress Illinois article explains, the Illinois PIRG Education Fund recently noted how consumer complaints against payday lenders highlight the “predatory” nature of these loans. The Illinois PIRG Education Fund issued a report that cited specific elements of consumer complaints, including some of the following:
  • Unaffordable loans and loan terms;
  • Abusive debt-collection practices;
  • Closures of personal bank accounts;
  • Getting stuck in cycles of debt; and
  • Overdraft fees and other penalties from the bank as a result of payday lenders’ collection strategies.
Of the complaints submitted, more than half addresses a relatively small number of payday loan companies—only 15 in total. The complaints, as the article makes clear, illuminate “problems with a full spectrum of predatory products and services, including storefronts and online lenders, short-term payday, long-term payday installment loans, and auto title loans.” Over the last couple of years, the Consumer Financial Protection Bureau (CFPB) received about 10,000 consumer complaints about payday lenders.
Given the number of complaints and the allegations concerning predatory lending practices, the CFPB has proposed new regulations aimed at curbing harmful practices of payday lenders. In the meantime, if you were treated unfairly by a lender or debt collector, you may be able to file a claim. An experienced Oak Park consumer protection lawyer can help. Contact the Emerson Law Firm today for more information.
See Related Blog Posts:
Mistakes to Avoid When Dealing with Consumer Debt

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