Category: Illinois

PLS is 28th on the Crain’s Fast Fifty list of fastest-growing local companies, although revenue is down this year. In 2008, this privately held company did $218M in revenues.

President Bob Wolfberg says:

“If you believe there’s nothing wrong with (this type of) loan, why should (the unemployed) be any different from someone who has any other form of income?”

I would not give a loan to an unemployed person, b/c I don’t think they can pay it back. Bob does make a pretty good point. For the record, these loans to the unemployed account for less than 1% of their portfolio. Almost jokingly, “I don’t think we’ve paid for the cost of the banners” in PLS storefront windows proclaiming that unemployment benefits qualify.

You can read the full article in Chicago Business magazine.

It’s no secret that the current payday loan laws in Illinois, for lack of a better word, suck. Every cash advance lender, to my knowledge, is offering installment loans; which makes this class action law suit seem pretty silly. Americash is getting singled out for providing installment loans, under a completely different law and license.

Enter Tom Geoghegan; a Harvard educated lawyer.

You can read the full article in Lawyersandsettlements.com.

David Hernandez has a warrant for his arrest. The charges are for mail fraud, but the bigger picture is a payday ponzi scheme he operated.

What’s worth mentioning about this story is that if someone offers you “guaranteed investment contracts” at rates of 10-16% you should run. It’s too good to be true.

The FBI made this statement:

You can read more about this story in the Chicago Tribune.

Federal regulators accused the owner of a Chicago sports website on Monday of running an $11 million Ponzi scheme.

The accused, David J. Hernandez, allegedly misrepresented the company as a successful business that invested in payday loan stores when in fact it was out of business. It also said he lied to investors when he said their investments were insured.

You can read the full aritlce in the Chicago Tribune.

Progress Illinois’ Adam Doster is an opponent of payday lending. He writes for a blog titled Progress Illinois. He’s been blocking my comments on his posts b/c they conflict with his personal self interest.

He’s a self proclaimed activist, which means he has an ego the size of a Volkswagen.

I think this is a form of censorship. Please leave him a comment on his most recent post and let him know what you think. The other side of the story should be heard. If he’s just going to run a propaganda machine, he should be upfront about it.
http://progressillinois.com/2009/5/29/present-votes-predatory-lending#comment-7081

He’s saucy b/c a poorly written bill that would have capped rates in Illinois died a slow painful death in the executive committee of the House. Why didn’t it pass? It was a knee jerk reaction aimed solely at payday lenders.

SB1435 is stuck in the executive committee of the Illinois House. It’s a bad bill in my opinion, which is typical when you aim it at one group of people.

It’s status is: “Motion Do Pass as Amended – Lost“

Two more days until this bill dies on Friday, May 29th. You can read more about the bill’s details here.

Legislators have hacked a bill together in Illinois that will try and lock out smaller, local lenders. This bill can expire May 31st when the general session ends. Other possibilities is and extended session, if the budget does not get balanced. If the bill dies, everything starts over in November. It’s currently in the Executive Committee of the House.

Originally, SB1435 capped rates for loans greater than 120 days at 99% interest. My feeling was that many toes outside of the payday industry would be stepped on, which would slow down the bill. This bill has been beefed up since my original post titled, Illinois Trying to Cap Rates at 99%.

This bill is basically getting rid of smaller lenders b/c the big payday lenders can survive operating under the PLRA loan structure. The pricing for CILA (installment lenders) is there for the Houshold Financials and American Generals of the world that lend between 36-100%.

Here are the details (talk about knee-jerk):

1. 99% APR cap on all loans of $1000 or less; 36-70% APR cap on loans between $1001 and $4000; 36% APR cap on loans over $4000
2. 20% gross monthly income requirement
3. Minimum loan term 180 Days
4. No dual licensing – only CILA or only PLRA
5. Database check on CILA loans
6. Only one CILA loan per customer
7. Ban on balloon loans in CILA – all must be fully amortized
8. No postdated checks

Attorney Tom Geoghegan thinks that Americash is breaking the law by offering installment loans. The industry has been offering installment loans as an alternative to payday loans since 2005. I have to imagine that there is already a precedent for this type of case in Illinois. Besides, how can they be skirting a law, if they’re following another one?

Of course, he’s probably going to try and turn it into a class action suit. That’s what attorney’s do. If they can refund one penny to 1000 people, you have to pay their attorney’s fees. These fees are exorbidant. They typically get into the six digits.

The problem with these lawsuits is that you have to spend $25k just to fight them. If you win, guess what you get? Nothing. You just don’t have to pay these extorshionists….oops I meant class action lawyers.

The article is titled: Are Payday Lenders Skirting the Law?

In Illinois, a payday lender can provide a 14 day cash advance and make $15 per $100. The problem is that the state database limits what people can borrow and completely eliminated rollovers by a cooling off period. Under this law, the industry would take a big financial hit. Ironically, this act was supported by the large national payday chains.

The PLRA act covered loan that were less than 120 days. So lenders put away their payday hat and started operating under CILA (Consumer Installment Loan Act). This covers any lender that loans money up to $25k on a single loan.

Payday lenders began offering 120-180 day installment loans. When national payday operators started losing customers to the installment lenders, they started offering installment loans too.

The PLRA loan was way to overbearing for borrowers. People cannot stand to be treated like children.

My theory is that this 99% bill is aimed directly at payday lenders. The reason 99% works is that it does not step on the toes of the large banks like HSBC, which offer loans routinely at 36% and greater.

SB1435 is getting steam. Its passed the Senate on April 2nd and is not in the house. I find this page the best way to track a law. If you’re really bold, you can try and follow this flow chart of how a bill becomes a law in Illinois.

You can also read more about Senate bill 1435 at Progress Illinois.

This should go under my WTF post of the week. Illinois has been laying on the fines. This pdf is on the front page of the Illinois state’s site for January, 2009.

All the payday lender fines start on page 3. Here’s just a taste:

QC Financial Services, Inc., Waukegan – PLRA license (1265) fined $43,650 for the following violations: lender did not verify that the loan was permissible, lender did not enter into the database that the borrower’s loan was paid in full or cancelled on the day the transaction was made,lender made a payday loan that resulted in the borrower having outstanding payday loan(s) more than 45 consecutive days, loans over 25% of borrower’s income, lender made a payday loan resulting in the borrower having a combined outstanding payday loan principal balances greater than 25% of borrower’s gross monthly income, lender did not properly enter loan(s) into the database onthe day made, and official income documentation was not the required type for a payday loan or was not for income for the 30 days preceding the loan.

Illinois’ new motto should be protecting consumers long enough to get our cut.