Online Payday Loan Company Fined for Obscene Interest Rates
An online payday loan firm has been ordered to stop issuing loans to Illinois residents and was fined more than $230,000 on Wednesday by the Illinois Department of Financial and Professional Regulation for issuing a $300 payday loan with an interest rate of more than 2,000 percent.
The order and fine were issued against Global Payday Loan, doing business as Payday-Loans-Yes.com, which was ordered to cease operations in the state and pay $234,000 for charging Illinois customers excessive interest rates and violating the Payday Loan Reform Act, according to a release from the IDFPR.
The order invokes the largest fines ever imposed on a payday cash advance lender, with the total fine including:
- $1,000 per day for acting as a payday lender without a license
- $1,000 for making a payday loan with a term of less than 13 days
- $1,000 for assessing finance charges in excess of $15.50 per $100 loaned
- $1,000 for failing to verify that a payday cash loan was permissible under the PLRA
- $1,000 for failing to provide a consumer with notice of the right to a repayment plan
- $10,000 for interfering with the Division’s authority to examine a lender’s books, records, and loan documents
- $10,000 for engaging in unfair, deceptive, and fraudulent practices in collecting a cash advance, according to the release
The department investigated a complaint by a consumer who borrowed $300 through the company’s internet website, and found several violations, the release said.
The loan was written with a six-day term, which does not allow sufficient time to repay the loan; and fees on the loan exceeded the $15.50 per $100 allowed in Illinois. The annual percentage rate on the loan was 2,190 percent, the release said. The bad credit cash loan company also failed to provide the borrower with a statement explaining her rights, including the right to initiate an interest-free repayment plan.
The company continued to violate the consumer’s rights and still sends her e-mail warnings that her account is “seriously delinquent,” the release said.
As of April 1, the borrower had already paid the lender $360, which is $13.50 more than the company was entitled to collect under the PLRA. In April, the woman and her employer received several calls demanding additional payment, with Global representatives asserting the unpaid balance on her online payday advance was $630.00.
“I have been in the middle of a nightmare, and I will be glad for it to be over,” the borrower (unnamed for privacy reasons), said in the release. “These people are sharks, and I don’t owe them any more money, and don’t deserve to be harassed by them. That’s why I filed the complaint with the state.”
Global Payday Loan was also ordered to provide documents showing whether it has made loans to any other Illinois consumers, the release said.