ABC 7 Chicago
December 6, 2005
New rules now protect Illinois
consumers from abuse by unscrupulous payday loan lenders. State inspectors are
out looking for violations of the new law.
It didn’t take long for state examiners to find problems. At
one loan store, examiners say there was false advertising of a payday loan, and
there wasn’t proof of a bond to secure the loans. Examiners inspected
facilities throughout the state as the new payday loan reform law takes effect
“We’re out here to protect our
consumers, to make sure are regulations are being met through our department,
and aims basically just to make sure the lenders are doing what they’re
supposed to as they’re advertising,” said Deborah Jennett, Illinois
Financial and Professional Regulations examiner.
Outside some facilities, consumer
advocates passed out flyers with details of the new law so perspective
borrowers know their rights.
Blagojevich has directed the Department of Financial and Professional
Regulations to aggressively start enforcing this legislation and to pay
particular attention to any lender who may try to get around the new
restrictions,” said Dean Martinez, Illinois Financial and Professional
“The most important thing
about the new law is that it will protect vulnerable consumers from getting
caught up in an endless cycle of debt,” said William McNary, Citizen
The new law:
- limits the interest to $15.50 per $100
- sets a cap on the loan amounts to $1,000 or 25 percent of
the monthly salary
- no more than two payday loans at a time
- 56-day repayment period with no additional interest
- protects borrowers from paying attorneys fees and court
“While payday loans are an
expensive credit product we believe these key provisions will help keep a
short-term loan from becoming a long-term problem,” said Tom
Consumer advocates caution use of
payday loans, even with the new law, because they say the interest rates and
fees are higher than other borrowing options.
“Please, please, it will be
better to go without this holiday season than to go without for many years to
come,” said Rev. Jennifer Kottler, Protestants for the Common Good.
Examiners went to more than 50
lending stores Tuesday. Nearly all reportedly had violations of the new law.
There will be more surprise inspection over the next few days.
With other regulation lenders were
able to subvert consumer protections. This law is tougher and each violation
could carry up to a $10,000 fine.
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