Iowa AG Bans High-Interest Lending by Pension Advance Company

Military Service Members  •  Payday Lending  •  State AGs

On January 4, 2017, the Iowa Attorney General’s Office (“Iowa AG”) announced that it had entered into an agreement with a company accused of charging high rates of interest on cash advances from pension accounts.  According to the Iowa AG, the company charged up to 200 percent interest for cash advances on pensions, primarily pensions held by military veterans.  The company took the position that the transactions were sale agreements involving the rights to the future payments of the pension funds, while the Iowa AG alleged that these transactions were loans at excessive interest rates.  According to the agreement entered into by the company and the Iowa AG, the company will cease to collect in excess of the amount of money advanced to consumers and refund those consumers who have already paid back more than they were advanced.  The company also agreed to pay the state a $35,000 fine.

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