The decision favors a Utah lender that made a 482% loan to an Illinois resident despite Illinois’s 36% rate cap
For Immediate Release:
February 5, 2025
Contact:
Robert Mayo | hello@woodstockinst.org
CHICAGO – On February 4, the First District Appellate Court, which encompasses Cook County, issued a ruling upholding a decision that a 482% APR loan made by a Utah-based online lender to an Illinois resident did not violate the Illinois Predatory Loan Prevention Act (PLPA), which caps consumer loan rates in Illinois at 36% APR.
This decision is the latest development in an ongoing saga of high-cost lenders – both inside and outside Illinois – blatantly charging Illinois consumers triple-digit interest rates despite the rate cap that Governor Pritzker signed in 2021 as part of the Illinois Legislative Black Caucus’s agenda to eliminate systemic racism in Illinois. Just-released polling shows that 88% of Illinois voters and 95% of former payday loan borrowers support a rate cap of 36% APR or lower.
“We knew predatory lenders would attempt to evade the rate cap, so the law was written with strong Anti-Evasion provisions. Nevertheless, lenders are violating the law with impunity, which will most certainly encourage more lenders to do the same.,” said Brent Adams, Senior Vice President of Policy and Advocacy at Woodstock Institute and former head of IDFPR, the state agency that oversees the high-cost lenders.
“The implication of this decision is that state rate caps are void as long as the lender uses an address in a state without a rate cap, which can be as easy as using a private mailbox,” said Daniel Edelman, a nationally recognized consumer rights attorney.
Advocates including Woodstock Institute have raised alarms over “rent-a-bank” arrangements where high-cost lenders circumvent state rate cap laws by partnering with out-of-state banks to make loans far in excess of a state’s rate cap. One such rent-a-bank lender partnered with an out-of-state bank, once again based in Utah, to make a loan at 159.5% APR to an Illinois resident. This decision represents a significant escalation of this practice by theoretically allowing any online lender to circumvent Illinois law and charge usurious interest rates to Illinois consumers.
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