Advance America will pay Pennsylvania consumers $8 million in restitution as part of a settlement with the Pennsylvania Attorney General’s Office to resolve claims that the company illegally provided payday loans, some with interest rates as high as 368%.

NCAS of Delaware LLC, doing business as Advance America Cash Advance Centers and Advance America Cash Advance Centers Inc., agreed to pay restitution, provide an additional $2 million to Pennsylvania and forgive unpaid principal balances of approximately $12 million. The restitution is among the largest settlements ever obtained by the AG’s office.

Advance America offered a loan product it called a "Choice Line of Credit" that required consumers to pay a "monthly participation fee.” Pennsylvania officials maintained that the monthly fee was actually interest, that when properly calculated, meant the lender charged exorbitant interest rates in violation of Pennsylvania law.

Along with the $8 million in restitution and $12 million in loan forgiveness, Advance America will pay $1.75 million in total costs to the AG’s office and $250,000 to cover the costs of a third-party administrator to distribute the restitution. Advance America also is enjoined from further violations of the Consumer Protection Law, the Consumer Discount Company Act and the Loan Interest and Protection Law. The settlement still officially requires court approval.

Consumer restitution will include the total monthly participation fees paid by the consumer, less any principal balance owed by the consumer. Regardless of whether the consumer files a claim for restitution, all unpaid principal balances will be forgiven by Advance America.

Consumers who may be eligible for restitution will be identified through the company's records. Consumers do not need to file a consumer complaint but will receive a letter from the AG’s office containing a claim form. To be eligible for restitution, consumers must follow the instructions in that letter and submit a completed claim form to the third-party administrator named on the form.

"We maintain that this company disguised its outrageous interest rates as fees, misleading consumers and violating the law,” Pennsylvania Attorney General Kathleen G. Kane said. "Payday lending practices adversely impact vulnerable consumers and often force them into a cycle of debt from which many cannot recover."

Advance America has 100 branches in Pennsylvania.

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