HARRISBURG, Penn. -
The court ruled that the product, which allows customers to borrow up to $500 if they pay a $149.95 monthly "participation fee" and 5.98% interest, violates Pennsylvania's Consumer Discount Company Act. The court referenced Pennsylvania's significant interest in protecting borrowers from exploitative lending practices in finding that the law applies to this product.
Acting Banking Secretary Victoria A. Reider said she will seek restitution through the court requiring Advance America to repay consumers. The Banking Department led suit in September, alleging that Advance America was providing lines of credit to borrowers without a license and with interest and fees in excess of state law. The state banking department spearheaded the lawsuit against Advance America.
Advance America operates nearly 100 offices in Pennsylvania and began offering the "Choice Line of Credit" in June 2006 after FDIC issued stricter rules for banks involved in payday lending.
A copy of the court's ruling is available at www.banking.state.pa.us.
