Charlotte banks linked to loser of $18 million consumer lawsuit

In this week’s issue of CL, we told you about Bank of America, Wells Fargo and Wachovia’s links to payday lenders. Our White Knights of Uptown have quite a history of propping up one of the nation’s most disreputable industries, as was documented in detail in a report released last week by National People’s Action, an economic justice think tank. That report singles out Bank of America and Wells Fargo for being major players in the success of Advance America, the largest  of all payday loan companies. In fact, those two banks provided Advance America with nearly $50 million in credit before the company opened a single storefront.

If the name Advance America rings a bell, it may be because it was the company whose grossly exploitive policies were ultimately responsible for North Carolina setting limits on payday lenders’ rates. Today, Advance America is in the news again. The company has agreed to pay $18.75 million to more than 140,000 North Carolina consumers as part of a proposed settlement agreement. The settlement resolves the 2004 class action lawsuit against Advance America, which was accused of charging illegal fees and interest rates. Advance America once ran 118 branch offices throughout North Carolina. Consumers represented in the lawsuit were charged annual percentage rates exceeding 450 percent. Attorneys for the consumers say the settlement is by far the largest one ever won from any payday lender in the U.S. Congrats to the winners, and good riddance to Advance America’s policies. Unfortunately, as you can read in the article linked above, Bank of America is still involved with the industry.

This article appears in Sep 21-27, 2010.