All Credit Lenders, five others hit by AG action in Illinois
Staff Writer |
Attorney General Lisa Madigan is cracking down on lenders in Illinois that are illegally selling small-dollar loans riddled with hidden costs and fees.
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This is including a $3.5 million settlement with All Credit Lenders that has provided hundreds of thousands of dollars in restitution for consumers across the state.
Madigan’s settlement requires the Elgin, Illinois-based All Credit Lenders to immediately stop offering the revolving line of credit that carried hidden interest rates disguised as “required account protection fees†ranging from 350 percent to more than 500 percent.
Under the settlement, the company must stop collecting on these loans and waive outstanding balances for thousands of consumers.
All Credit Lenders has already paid $200,000 in restitution to borrowers who were unemployed or receiving social security at the time they received their loan and borrowers who had previously filed complaints with Madigan’s office.
In addition to this settlement, Madigan has reached agreements with five other lenders in Illinois that offer similar loan products requiring them to stop lending and collecting on those loans.
The settlement with All Credit Lenders resolves Madigan’s 2014 lawsuit that alleged the required account protection fee was in fact undisclosed interest and violated Illinois’ 36 percent interest rate cap set in the Illinois Financial Services Development Act (FSDA), which misled consumers about the true cost of their loans.
Madigan also alleged the structure of the revolving credit loan product, including its failure to amortize, was unfair, abusive and designed to place consumers in an endless cycle of debt.
The settlement agreement required the company to do the following:
- All Credit Lenders immediately stopped accepting payments for loans not in collection on which credit was extended prior to March 25, 2016. Any outstanding amounts on these loans were also waived and deemed paid in full.
- All Credit Lenders stopped collecting on outstanding amounts by July 18, 2016, for loans not in collection on which credit was extended on or after March 25, 2016. Outstanding amounts due on these loans were waived and deemed paid in full.
- The company immediately stopped collections activities on these loans (including letters and phone calls), stopped accepting payments, including payments received through wage assignments, by Aug. 2, 2016, when the outstanding amounts due on these loans were waived and deemed paid in full. ■