Illinois State: Fine AmeriCash for alleged overcharges
July 7, 2006 - Springfield, Illinois
The Blagojevich administration and Attorney General Lisa Madigan took action Thursday to stop what they allege is a consumer protection violation by payday loan company AmeriCash Loans LLC of Des Plaines.
AmeriCash's general counsel said in a statement that a computer error caused it to make a mistake, and the company apologized for the error.
The Illinois Department of Financial and Professional Regulation issued an order Thursday to fine AmeriCash $190,000 for allegedly charging higher interest rates than the law allows on payday loans.
Payday loans are short-term, high-interest loans, usually for less than $1,000. Consumer advocates accuse payday lenders of preying on the working poor, but lenders say they provide a necessary service.
Examiners for the department found that AmeriCash allegedly had issued 19 loans with interest rates of 521 percent, or 28 percent higher than the rate allowed by the state's payday lending law, according to a press released issued by Gov. Blagojevich and Madigan.
"We have copies of legal documents that violate the law," alleged Susan Hofer, spokeswoman for 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," Blagojevich said in a statement.
AmeriCash has 10 days to request an administrative hearing to contest the order.
AmeriCash has rectified the problem, and did not access consumers' bank accounts or collect any monies based on any wage assignments, said AmeriCash 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."
"As soon as it was discovered that our computer systems were automatically and incorrectly including wage assignments, we pulled the product immediately and began contacting our customers to notify them of this error and that we would not access their bank accounts or collect any monies based on any wage assignments," according to the company's statement.
The Chicago Sun-Times, Sandra Guy, Business Reporter
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