A payday cash advance lending business violated Pennsylvania consumer law by providing loans of as much as $500 to people in return for 6 percent interest plus a $150 monthly fee, a state court ruled Tuesday.
A Commonwealth Court panel agreed with the Banking Department’s claim that fees charged by Advance America Cash Advance Centers exceeded limits of the state’s Consumer Discount Company Act.
The Banking Department sued Advance America’s parent company, NCAS of Delaware LLC, in September, three months after the company began offering the bad credit payday loan product.
The lawsuit called Advance America’s $150 ”monthly participation fee” an illegal and usurious sham.
The opinion issued Tuesday prevents Advance America from continuing to lend money or ”collecting on lines of credit or loans currently outstanding in the Commonwealth of Pennsylvania pursuant to the” violations of state law.
But the judges also said the company may pursue its allegations of constitutional violations and cautioned that the case record was not sufficient for them to determine whether the participation fee amounted to ‘’sham interest.”
Advance America spokesman Jamie Fulmer said the faxless payday advance company had no immediate comment on the effect of the injunction.
”Families who seek these types of loans are usually living paycheck to paycheck and need just a little bit more to make it to Friday,” she said. ”Preying on their need by charging exorbitant fees is simply unconscionable.”
Advance America, based in Spartanburg, S.C., calls itself the country’s leading provider of payday loans, with more than 2,800 centers, including about 100 in Pennsylvania.
In the Lehigh Valley area, it has offices in Allentown, Bethlehem, Easton, Whitehall Township, Stroudsburg and Pottsville.