NPA Wins Injunction Against 36% Rate Cap

Mark Campanale Government Relations, Government Relations Updates, Members Only

NPA, IPA and Other Plaintiffs Won a Preliminary Injunction against the Illinois Department of Financial and Professional Regulation’s Attempt to Apply a 36% Rate Cap on Illinois Pawnbrokers!  

September 7, 2021
As many of you know, the NPA joined the Illinois Pawnbrokers Association, Cash America, Inc. of Illinois, and EZPawn Illinois, Inc. as named plaintiffs in seeking a preliminary injunction against the Illinois Department of Financial and Professional Regulation’s attempts to add pawn transactions to the 36% rate cap legislation enacted in March 2021 for payday, vehicle-title, and certain installment loans in Illinois. 

Our original complaint was filed in May and in July we added a motion for preliminary injunction and filed an amended complaint. On Friday, September 3, 2021, the lawyers representing all plaintiffs – an excellent team from Locke Lord in Chicago and Springfield – argued our position before the Court.

Today, September 7, 2021, the Judge granted our Motion for Preliminary Injunction which prevents the Department from enforcing the 36% rate cap legislation against pawnbrokers and pawn transactions. The Judge further denied the Department’s motion for judgment against us on the pleadings. The standard for granting preliminary injunctions requires a substantial likelihood of ultimate success on the merits of the case. So, this very important round goes to us.

However, these are preliminary rulings, and the case still must go to trial on the merits of the arguments. Still, to have helped Illinois pawnbrokers remain in business and protect their consumer customers from losing their only regulated, non-recourse option for safety-net funds is extremely rewarding.

This litigation does not affect the two federal rate cap bills that were recently introduced in the U.S. Senate or what we also expect to see in the House of Representatives. It does mean that we must maintain our focus on Congress as well as other state legislatures – including the Illinois State Legislature. It is imperative that pawnbrokers explain to federal and state legislators why pawn transactions are important. And why pawns are different from the products being mentioned in Congressional hearings and in the media as predatory. 

Now is the time to grab some of the NPA’s new The Truth About Pawn Shops trifold brochures on pawn transactions and visit with your state legislators, your members of the U. S. Congress, or the staff in their local offices. It is the perfect time to educate these legislators and staff about why pawn is important to your community. 

You can download a printable version of the trifold from the NPA’s website. Also, Mark Bolles has generously offered for Burrell Printing to send you copies and all you need to do is contact him. Gather everything you need from our NPA toolkit at https://www.nationalpawnbrokers.org/npa-legislative-activism/ and go educate legislators about pawn!This GRC Update is not intended and should not be construed as legal advice to NPA members. Members should consult their own lawyers for legal advice. Copyright © National Pawnbrokers Association 2021. All rights reserved.