(Source: Attorney General Ken Cuccinelli) – RICHMOND (June 4, 2013) Today, Attorney General Ken Cuccinelli announced that his office has reached a settlement with Advance, LLC, d/b/a Advance Til Payday, an Illinois-based consumer lender operating one location in the Richmond area for alleged violations of the states statutes governing consumer finance.
Unless exempt, the consumer finance statutes prohibit unlicensed lenders from charging and receiving interest in excess of 12 percent per year on consumer loans. Under one exemption, lenders generally can charge interest and other fees at agreed upon rates. However, in such case the lender must provide a minimum 25-day grace period allowing the borrower to repay their loan in full before incurring interest.
The alleged violations occurred between December 1, 2008 and February 6, 2013. During that time period, Advance typically charged its borrowers a 15 percent cash advance fee that the borrower must repay, along with the principal amount, by the close of the first billing cycle. If the borrower did not pay the cash advance fee and principal balance by the close of the billing cycle, the borrower would be subjected to additional interest charges amounting up to 249.99 percent annually. The attorney general contended that the cash advance fee charged by Advance was interest charged without the application of a minimum 25-day grace period. Because the cash advance fee greatly exceeded legal interest rate limits, it allegedly violated the state consumer finance laws.
The settlement includes the following:
A permanent injunction preventing Advance from violating the consumer finance statutes in the future by charging and receiving interest in excess of 12 percent on consumer loans, unless Advance is otherwise exempt by statute.
Advance agrees to offer refunds of all cash advance fees paid by consumers who (1) received cash advances from Advance between September 1, 2012, and February 6, 2013, (2) were charged cash advance fees, and (3) repaid their cash advance balance in full by the close of the second billing cycle. This amounts to potential refunds of $39,790.00 to as many as 306 borrowers.
Advance further agrees to offer refunds of all cash advance fees paid by consumers who; (1) received cash advances from Advance between December 1, 2008 and August 31, 2012, (2) were charged cash advance fees, and (3) repaid their cash advance balance in full by the close of the second billing cycle. Borrowers who received cash advances during this period should file complaints with the Attorney Generals Office within one year and provide documentation that they (1) received a cash advance from Advance during this period; (2) paid it off by the close of the second billing cycle; and (3) paid a cash advance fee during this period.
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