Plaintiffs v Americash Loans LLC
Plaintiff Files Class Action Suit Against Americash Loans LLC
In June of last year, Kevin Johnson needed some quick cash for an emergency. He stopped by an Americash Loans outlet in his Chicago neighborhood and did what many Illinois consumers do daily: took out a short-term $700 loan. Under the agreement Johnson signed, Americash required him to pay back the loan in 24 semi-monthly installments of $105.30 for one full year, totaling $2,611 dollars, equivalent to a 365 percent annual interest rate. After making steady payments for 6 months, Johnson just couldn't dig up the necessary funds to pay off his increasing debt. So Americash provided him a second loan in February of this year for $400 dollars and with virtually the same terms. Now, if he pays off both loans on time and in full, he will have forked over almost $3,500 to Americash, all for $700 in short-term financial assistance.
Johnson also contends that Americash violated the state's Consumer Fraud and Deceptive Practices Act, which prohibits the use of business practices that "violate the public policy of Illinois, or are unconscionable or unfair or inflict substantial injury upon a consumer." Specifically, the suit argues that when Johnson signed his loan contract, it contained an arbitration clause -- nearly impossible to read without a magnifying glass -- that misleadingly suggested he would not be charged legal fees in the event that the loans needed to be settled in an arbitration negotiation -- this despite the fact that Americash knew he could not afford such expenses. If their suit succeeds, Johnson and other Americash customers who paid more than five percent interest on their loans would be reimbursed.
Meanwhile, legislators in Springfield are still working to close the loophole that led to these abuses. Rep. Julie Hamos (D-Evanston) told bloggers on a conference call last Thursday that she expects her bill aimed at reforming the Consumer Installment Loan Act -- which passed the Senate in April -- to come up for a vote in the House this week. If approved, it would cap interest rates on installment loans at 99 percent APR, index the loans based on a borrower's ability to pay, and would require loans to be paid off in equal monthly installments with no balloon payments.
For more information please contact:
Tom Geoghegan
Despres, Schwartz & Geoghegan
77 W Washington St # 711, Chicago, IL 60602-3271
Contact Phone: (312) 372-2511
