Elgin Payday Lender Agrees to Settlement for Deceptive Lending Practices

Allegations have been levied against payday lenders across the country concerning deceptive lending practices. According to a recent article in the Chicago Tribune, debtors who may have been victims of deceptive lending practices in Illinois now may be eligible to have their balances waived. Illinois Attorney General Lisa Madigan brought a lawsuit in 2014 that made allegations against payday lenders concerning “deceptive fees and costs.” Earlier this month, an Elgin-based payday lender agreed to a settlement, which includes forgiving “$3.5 million in small-dollar, high-interest loans.”
What else do you need to know about the recent abusive debt practices settlement? And will the settlement make a difference in lending practices among other payday lenders in Illinois?
Details of the Lawsuit and Against All Credit Lenders
All Credit Lenders is a company that opened its doors, so to speak, in 1999. While it does have a number of storefront locations in the Chicago area where consumers can walk in to seek out a payday loan, the company also has a website through which consumers can apply.
Illinois established certain consumer protection laws that prevent payday lenders from charging more than 36% interest on a loan. That interest rate cap is designed to prevent consumers from getting into “an endless cycle of debt.” In 2014, the State of Illinois alleged that All Credit Lenders had been charging an account protection fee, which was a way of disguising the fact that the payday lender was charging interest in excess of the 36% cap. A majority of the loans cited in the lawsuit were for small amounts of money ranging from $100 to $2,000, and the disclosed annual percentage rates for those loans were between 18 and 24%.
However, the account protection fee resulted in the debtor’s balance growing by $10 for every $50 of an outstanding balance. To put those figures another way, the account protection fee resulted in interest charges that ranged between 350 and 500%. According to the lawsuit, the lender had structured monthly payments in such a way that debtors would not be able to pay off their loans by making minimum payments.
Settlement Provides Relief to Debtors with Untenable Interest Rates
As the article details, as part of the settlement, All Credit Lenders will cease its debt collection practices for more than 5,000 debtors, and it will also waive the balances of their loans. According to the State of Illinois’s allegations, those loans “contained hidden interest rates ranging from 350 to 500%,” and those interest rates were hidden within the loans under the description of “required account protection fees.”
All Credit Lenders is not the only payday lender that has agreed to forgive similar loans. To be sure, five additional lenders in Illinois have agreed to the same terms. Those lenders include businesses under the names of: Advance Paycheck, First American Cash Advance, First American Cash Loans, CashCity Loans, Express Cash Mart of Illinois, QC Lenders, and ASAP Cash Loans I.
According to Madigan, “these are egregious violations of the payday reform law we fought to put in place to protect consumers from outrageously expensive loans.” As she went on to clarify, “All Credit Lenders and these other operators concoct illegal fees and costs, then fail to disclose them, and as a result, consumers end up owing enormous amounts outlawed by our reforms.”
You have rights as a consumer. If you believe you have been the victim of deceptive lending practices, an experienced consumer protection lawyer in Oak Park can assist you. Contact the Emerson Law Firm today.
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