On February 11, Pennsylvania Attorney General Kathleen Kane announced that payday lender Advance America Cash Advance Centers Inc. will pay $10 million to settle claims that it hid allegedly sky-high interest rates from consumers in violation of state law.
In a lawsuit against Advance America, Kane alleged that the company offered a loan product it called a “Choice Line of Credit” that required consumers to pay a “monthly participation fee.” According to the Commonwealth of Pennsylvania, this monthly fee was actually interest, which, when properly calculated, meant that the lender allegedly charged interest rates above those allowed under Pennsylvania law.
“We maintain that this company disguised its outrageous interest rates as fees, misleading consumers and violating the law,” Kane said. “Payday lending practices adversely impact vulnerable consumers and often force them into a cycle of debt from which many cannot recover.”
NCAS of Delaware LLC, doing business as Advance America Cash Advance Centers and Advance America Cash Advance Centers Inc., agreed to pay restitution, provide an additional $2 million to the Commonwealth, and forgive unpaid principal balances of approximately $12 million. The restitution for consumers is among the largest ever obtained on behalf of consumers by the Pennsylvania Attorney General.
You can follow the Consumer Financial Services Law Monitor for continued updates on this and other news stories.