(Source: Attorney General Ken Cuccinelli) - RICHMOND (June 4, 2013) - Today, Attorney General Ken Cuccinelli announced that his office has reached a settlement with Advance, LLC, d/b/a Advance 'Til Payday, an Illinois-based consumer lender operating one location in the Richmond area for alleged violations of the state's statutes governing consumer finance.
Unless exempt, the consumer finance statutes prohibit unlicensed lenders from charging and receiving interest in excess of 12 percent per year on consumer loans. Under one exemption, lenders generally can charge interest and other fees at agreed upon rates. However, in such case the lender must provide a minimum 25-day grace period allowing the borrower to repay their loan in full before incurring interest.
The alleged violations occurred between December 1, 2008 and February 6, 2013. During that time period, Advance typically charged its borrowers a 15 percent cash advance fee that the borrower must repay, along with the principal amount, by the close of the first billing cycle. If the borrower did not pay the cash advance fee and principal balance by the close of the billing cycle, the borrower would be subjected to additional interest charges amounting up to 249.99 percent annually. The attorney general contended that the cash advance fee charged by Advance was interest charged without the application of a minimum 25-day grace period. Because the cash advance fee greatly exceeded legal interest rate limits, it allegedly violated the state consumer finance laws.
The settlement includes the following:
A permanent injunction preventing Advance from violating the consumer finance statutes in the future by charging and receiving interest in excess of 12 percent on consumer loans, unless Advance is otherwise exempt by statute.
Advance agrees to offer refunds of all cash advance fees paid by consumers who (1) received cash advances from Advance between September 1, 2012, and February 6, 2013, (2) were charged cash advance fees, and (3) repaid their cash advance balance in full by the close of the second billing cycle. This amounts to potential refunds of $39,790.00 to as many as 306 borrowers.
Advance further agrees to offer refunds of all cash advance fees paid by consumers who; (1) received cash advances from Advance between December 1, 2008 and August 31, 2012, (2) were charged cash advance fees, and (3) repaid their cash advance balance in full by the close of the second billing cycle. Borrowers who received cash advances during this period should file complaints with the Attorney General's Office within one year and provide documentation that they (1) received a cash advance from Advance during this period; (2) paid it off by the close of the second billing cycle; and (3) paid a cash advance fee during this period.
For all cash advances taken out between December 1, 2008, and February 6, 2013 with current outstanding balances, Advance agrees to not collect anything further beyond the principal amount loaned. This represents $8,383.37 in forborne interest collection from 22 borrowers.
Advance agrees to pay $10,000 for reimbursement of the Commonwealth's attorney's fees and costs.
"I am pleased that we were able to reach a fair and reasonable agreement with Advance which will provide relief to affected borrowers in the form of restitution and restrained interest collections," Cuccinelli said. "We appreciate their cooperation throughout the investigation."
The Office of the Attorney General will be monitoring the restitution and forbearance phase of the settlement to make sure it is being administered properly. Consumers who received cash advances between December 1, 2008 and August 30, 2012 may file complaints with the Attorney General's Office by downloading, completing and sending in a complaint form and supporting documentation to the Attorney General's Office. Consumers can download and print a paper complaint form here. Alternatively, consumers can submit complaint information and documentation electronically here.
Consumers who received cash advances between September 1, 2012, and February 6, 2013, will be receiving claim forms that they can return to receive restitution checks.
Consumers who have questions about the settlement may contact Advance toll-free directly at 1-866-346-7994.
The civil settlement is in the form of a consent judgment that has been filed with the Richmond Circuit Court for approval. Assistant Attorney General Mark Kubiak and Senior Assistant Attorney General Dave Irvin represented the commonwealth in this matter.