CHICAGO (CBS) — Attorney General Lisa Madigan announced a settlement Thursday with a northwest suburban Elgin payday lending company that illegally sold loans with hidden interest rates and fees.
The settlement requires All Credit Lenders to pay $3.5 million and “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,” according to a statement from Madigan’s office.
All Credit Lenders must stop collecting on loans carrying these fees and waive outstanding balances for thousands of customers, prosecutors said. The company has already paid $200,000 in restitution to borrowers who were unemployed or receiving social security when they received their loan and borrowers who had previously filed complaints with Madigan’s office.
Madigan also reached settlements with five additional Illinois lending companies that offered similar loans, prosecutors said.
“These are egregious violations of the payday reform law we fought to put in place to protect consumers from outrageously expensive loans,” Madigan said in the statement. “All Credit Lenders and these other operators concoct illegal fees and costs, then fail to disclose them, and as a result, consumers end up owing enormous amounts outlawed by our reforms.”