Wednesday, August 8, 2007

Missouri Woman Files Lawsuit Against Payday Advance Lender

By Paul Rizzo
Payday Loan Writer

A St. Louis resident has filed a class-action suit again Advance America, a major payday loan company, accusing the company of predatory lending, according to a news release by Simon-Passanante P.C., a St. Louis law firm.

The firm represents Cynthia Williams, the lead plaintiff, in this lawsuit, which was filed Monday.

78bcdd52-4274-418f-9acb-40c474a7e177newsaporg.jpg In the news release, the law firm said at the heart of the lawsuit is the allegation that Advance America systematically traps customers in loans they cannot repay by violating Missouri law.

The firm said the suit was filed against the Spartanburg, S.C.-based company and its subsidiaries Cash Advance Centers of Missouri, doing business as Advance America. The company operates 2,900 cash advance stores in 37 states, about 82 of which are in Missouri. In Springfield, the company has six offices.

The law firm said Williams, beginning in March 2006, was trapped in a cycle of debt after taking out a loan at Advance America and that she and her husband began working 70-hour weeks to pay off the debt.

The suit alleges that while state law allows borrowers to repay the bad credit payday loans in up to six payments, Advance America limited borrowers to four payments. Borrowers were then trapped in loans charging more than 400 percent interest, despite interest at 324 percent capped by laws.

Other allegations include:

• Advance America exploited borrowers’s financial situations; intentionally loaning too much money at an interest rate higher than 400 percent that trapped them in a cycle of debt.

• Advance America created phony “new loans” and encourage customers to take these out rather than make payments to reduce their existing fast payday advance.

St. Louis lawyers John Simon, Erich Vieth and John Campbell of Simon-Passanante P.C. and Debra K. Lumpkins of Gateway Legal Services filed the lawsuit on behalf of the borrowers. Simon-Passanante said this is the first class action lawsuit filed against Advance America in Missouri.

Simon-Passanante and Gateway Legal Services said they also have class action cases pending in St. Louis County and St. Louis City against three other payday lenders, including Quik Cash, based in Overland Park, Kan.

“Missouri law is designed to protect Missouri citizens by getting them out of [payday advances] as quickly as possible and by capping the amount of interest charged on a loan. Advance America has short-circuited these protections,” Campbell said in the news release.

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