In February, we shared news of the Illinois First District Appellate Court’s decision that a 482% APR loan made by a Utah-based online lender to an Illinois resident did not violate the State’s 36% APR consumer loan cap established in 2021 by the Predatory Loan Prevention Act. The implications are far reaching – theoretically, any lender could merely use an address in a state without a rate cap to make loans to citizens in states with rate caps.
In response, Woodstock Institute is supporting the plaintiff’s efforts to appeal this case, Morgan v. Silver Financial, to the Illinois Supreme Court in the hopes they will overturn the lower court’s decision. We have filed an amicus brief outlining our concerns about how this case could harm not only Illinois consumers, but all consumers in states with rate caps.
If left unaddressed, the appellate court’s decision in this case stands to undermine the benefits of the PLPA and resume the cycle of debt that entrapped Illinois consumers for decades before the law’s enactment. It would directly harm the consumers and communities that Woodstock works to protect and uplift. And the ruling threatens to upend not only the PLPA, but a bevy of similar consumer-protection laws passed by the General Assembly that are also crucial to Woodstock’s mission.
Woodstock has a significant, unique, and non-pecuniary interest in this case not adequately represented by the current parties, and can provide this Court with insights on the negative impacts that the appellate court’s erroneous decision poses for Illinois public policy and consumers other than the Plaintiff. Woodstock is also uniquely positioned to provide the Court with insight into the significant public interest in and enthusiasm for the PLPA. And it can offer valuable perspective on the steps other states have taken to enact laws modelled on Illinois’s—laws that could be undermined if the decision below stands. In light of this case’s significant implications for the stability and basic functioning of daily economic life for millions of consumers, this Court should grant the Petition for Leave to Appeal.
Argument
I. This case raises critical issues regarding the enforceability and effectiveness of the Predatory Loan Prevention Act and threatens the consumer protections the law created.
A. High-cost loans harm vulnerable Illinois residents.
B. The PLPA’s rate cap on consumer loans has saved Illinoisans hundreds of millions of dollars per year without eliminating their access to cash or credit.
C. The PLPA has broad support, including among former high-cost loan users.
D. The appellate court’s decision threatens to vitiate the PLPA by allowing out-of-state lenders to evade its rate cap.
II. This case has broader ramifications for the enforceability of consumer protection laws beyond the PLPA in both Illinois and other states.
A. Anti-waiver provisions like the PLPA’s embody the State’s fundamental public policy of counteracting the unequal bargaining power between businesses and consumers.
B. The PLPA is modeled after the federal Military Lending Act, which includes a prohibition on waivers to prevent evasion.
C. Other Illinois consumer-protection laws include anti-waiver provisions that would be undermined by the decision.
D. Other states have enacted similar laws modeled after the PLPA that would be impacted by this case.
