Madigan cracks down on unlicensed, predatory payday lenders
general, Department of Financial & Professional Regulation take
action against online payday lenders and lead generator promoted by
talk show host Montel Williams
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[April 10, 2014]
CHICAGO — Attorney General Lisa
Madigan filed five lawsuits Tuesday 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 against four
out-of-state payday lenders that are operating exclusively online, selling
payday loans with fees that are double the amount allowed under state law. The
lawsuits allege that 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 lenders 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
"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 in generating customer leads on payday loans with unlicensed lenders in
violation of state law. The lawsuit alleges that 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.
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Madigan's lawsuits follow several cease-and-desist orders issued to the
lenders and MoneyMutual by the Department of Financial and Professional
"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 the attorney general's Consumer Fraud Bureau.
[Text from file received from the office of
Illinois Attorney General Lisa