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Montel Williams Payday Lenders Get Hit by Attorney General

Attorney General Lisa Madigan today filed five lawsuits in a sweep cracking down on unlicensed, online payday lenders and a loan lead generator promoted by talk show host Montel Williams for illegally offering expensive, predatory loans that trap Illinois borrowers in excessive, cyclical debt loads.

Madigan filed lawsuits this week in Cook County Circuit Court on behalf of the Illinois Department of Financial and Professional Regulation (IDFPR) against four out-of-state payday lenders that are operating exclusively online, selling payday loans racked with fees that are double the amount allowed under state law. The lawsuits allege BD PDL Services LLC, Mountain Top Services I LLC, Red Leaf Ventures LLC and VIP PDL Services LLC charged Illinois borrowers $30 for every $100 loaned and allowed borrowers to take out multiple loans at once.

The Payday Loan Reform Act limits the fees a payday lender can charge a consumer to no more than $15.50 per $100 loaned. Payday lenders cannot issue a loan to a consumer if the loan would result in their being in debt to one or more payday lender for more than 45 consecutive days, and they cannot issue a loan to a consumer who already carries balances on two loans. Lenders must also wait seven days before issuing a loan to a repeat customer, once their loans are paid off.

“These online, unlicensed predatory lenders are putting Illinois consumers into unregulated, unprotected payday loans,” Madigan said. “None of these payday lenders is complying with the consumer protection we fought for over a decade to put into place to keep borrowers from being trapped in loans with excessive interest rates and fees.”

Madigan filed a fifth lawsuit against online broker MoneyMutual LLC for its role generating customer leads on payday loans with unlicensed lenders in violation of state law. The Attorney General’s lawsuit alleges the company was able to attract borrowers to its website in large part due to the profile of its celebrity spokesman Montel Williams.

Madigan also expressed concerns about the company’s data collection practices in light of the recent wave of major data security breaches. MoneyMutual requires potential borrowers to share their personal banking information, Social Security number, date of birth, driver’s license information, private address and employment records, all of which can be shared with third parties, putting borrowers at significant risk of identity theft.

Madigan’s lawsuits follow several cease and desist orders issued to the lenders and Money Mutual by IDFPR.

“Out-of-state lenders who ignore Illinois laws to take advantage of vulnerable consumers deserve to face the full weight of our laws,” said Manuel Flores, Acting Secretary of Financial and Professional Regulation. “It is gratifying that the Attorney General is backing up our cease and desist orders with demands for full restitution for the unwary borrowers.”

Madigan’s lawsuits ask the court to permanently ban the defendants from the payday loan business in Illinois, cancel pending payday loan contracts with Illinois consumers and require full restitution. The lawsuits also seek to impose on the defendants an array of civil penalties for violations of the Payday Loan Reform Act of 2005 and the Illinois Consumer Fraud and Deceptive Business Practice Act.

Assistant Attorneys General Sarah Poulimas and Khara Coleman Washington are handling the cases for Madigan’s Consumer Fraud Bureau

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  1. This is the Illinois AG, not the FTC. Was there a new development in their FTC investigation as well?

    1. Yeh. The URL needs to be fixed, because when it gets posted on FaceBook, etc. it shows the subject as FTC.

  2. The ironic part is that it’s not that hard to keep Illinois visitors from signing up for a payday loan. Simply remove the “Illinois” option in the drop down for State or redirect all visitors that choose “Illinois” to a personal loan company (via affiliate link) such as Prosper.

    It sounds to me like they just got greedy and never expected to be caught or punished. Even if there is a legal loophole (such as they are an Indian tribe), its still cheaper to stay 100% legit than pay legal fees to settle out of court.

  3. Once again, regulators are overprotecting consumers from themselves. Consumers willfully apply for these loans because they need the cash, and apply for multiple loans on a daily basis. The info required in the app is what is required to get any loan, online or at a brick and mortar bank. No more or less secure either way. When the consumer defaults or are late with payments they complain because they are being charged fees that they agreed to to obtain the loan. The restitution part is simply overdone, these consumers got the loan and used the money. All this does is try to give these consumers another government handout. Bottom line is that if consumers paid these loans back promptly, this is not even an issue.

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