Pa. court: High-cost loans violated banking laws

The Pennsylvania Supreme Court ruled Thursday that payday loans that cost borrowers a $150 monthly fee plus 6 percent interest violate state consumer law.

The high court upheld a Commonwealth Court ruling last year that fees charged by Advance America Cash Advance Centers exceeded limits of the state's Consumer Discount Company Act.

The state Banking Department sued Advance America over its "monthly participation fee" for their $500 lines of credit, calling them illegal and usurious.

Advance America spokesman Jamie Fulmer said Thursday he was not familiar with the decision and could not comment. The Spartanburg, S.C.-based company announced in December it was shutting down its Pennsylvania operations because of the Commonwealth Court decision.

"When you're not in a position to generate any revenue, you can't cover your cost," he said. All of the company's Pennsylvania stores have been closed, he said.

Advance America calls itself the nation's leading payday advance company, with more than 2,800 centers.