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HARRISBURG—Yesterday Advance America announced that they are again issuing payday loans in Pennsylvania despite the fact that these high-cost loans are not permitted under state law. The company has re-designed its fee structure, charging a $149.49 monthly “participation fee” supposedly for arranging consumer loans of $500 or less. This fee, when combined with the 5.98 percent interest rate on outstanding balances, brings the minimum cost of the credit line up to nearly 370% APR.

“Pennsylvania law clearly prevents companies from charging that much to make small loans, whatever they decide to call the charges,” said Jim Swoyer, a Public Interest Advocate with the Pennsylvania Public Interest Research Group (PennPIRG), “This is just another cynical attempt to circumvent the Pennsylvania small loan and usury caps which prevent companies like Advance America from fleecing vulnerable consumers.”

Federal Deposit Insurance Corporation (FDIC) actions against Advance America’s payday lending partners forced the company to cease issuing new payday loans in Pennsylvania on March 27, 2006. When the FDIC told its banks to stop "renting" their charters to payday lenders, the product was essentially pushed out of Pennsylvania.

Swoyer concluded, “Advance America is setting up the same payday debt trap the FDIC and Pennsylvania regulators shut down earlier this year. This payday loan by another name will suck consumers into the same vicious cycles of debt that prompted those regulatory actions.”

The Pennsylvania Public Interest Research Group (PennPIRG) is a non-profit consumer advocacy group representing 3,500 citizen members across the state. PennPIRG has offices in Philadelphia and Harrisburg. For more information, visit www.pennpirg.org.