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.

News Source

The Chicago Sun-Times, Sandra Guy, Business Reporter

Related Stories - Illinois

• Illinois' payday loan problem is far from over [December 27, 2006]
• 'Marketplace' on payday loans: 'Trapped in Financial Quicksand' [November 30, 2006]
• Report blasts payday lenders [November 25, 2006]
• Dan Rather Reports criticizes payday loan industry [November 23, 2006]
• Illinois fines payday lenders $500,000 in 10 months [November 1, 2006]
• Blagojevich's payday lending reforms save Illinois borrowers $6.4 million [October 31, 2006]
• PLS payday loan store donates $18,000 to schools [October 22, 2006]
• Blagojevich calls for federal payday lending protections [September 7, 2006]
• Payday loan crackdown ... Blagojevich aide politicizing issue [July 12, 2006]
• Illinois State: Fine AmeriCash for alleged overcharges [July 7, 2006]
• Blagojevich turns up heat on payday lenders again [June 28, 2006]
• Payday lenders win one in court [June 1, 2006]
• New rules seek to reform small loans [April 5, 2006]
• State revokes licenses [April 5, 2006]
• Payday loan law put on hold [February 11, 2006]
• Illinois issues fines under new payday loan law [December 21, 2005]

Return

See: Recent News | Archived News | RSS Newsfeeds | News by State
Go to PLIWatch.org home.