Blog Enforcement Watch October 06, 2016

Illinois AG Settles for $3.5 Million with Small-Dollar Lender Over Disguised Interest Rates

On October 6, 2016, the Illinois Attorney General’s Office (“Illinois AG”) announced that it had reached a settlement with a small-dollar consumer lender for approximately $3.5 million, resolving allegations that the lender violated the Illinois Financial Services Development Act’s 36% interest rate cap. The Illinois AG accused the lender of misleading customers by disguising interest rates ranging from 350% to more than 500% APR as “required account protection fees.” This settlement resolves litigation originally brought by the Illinois AG’s office in 2014. Under the terms of the settlement, the lender must stop collecting these loans and waive all outstanding balances. As of the date of the settlement, the lender had already refunded $200,000 to affected consumers.