HARRISBURG, Pa. -- In a sharp setback for payday lenders, the Pennsylvania Supreme Court has upheld a lower court ruling that Advance America, the nation's largest payday lender, violated the state's Consumer Discount Company Act subjecting the firm to return of consumer funds.

The state's Department of Banking, as plaintiff against Advance America in a September 2006 suit, maintained the firm under its "Choice Line of Credit" product was providing lines of credit to borrowers without a license and with interest and fees in excess of state law.

In a statement issued Friday, Secretary of Banking Steve Kaplan said that the department will seek restitution on behalf of Pennsylvania customers of Advance America. The exact amount being sought is still to be determined "after we calculate borrowers and the loans made," said a spokeswoman.

"We're pleased that the court has ruled in favor of Pennsylvania consumers, many of whom were wrongly charged hundreds, potentially even thousands, of dollars," said Kaplan. "This decision paves the way for the banking department to pursue restitution for these victims."

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