Payday Loan Lenders Charge 900% Interest, Class Action Claims

A group of Virginia consumers say that certain lenders are using Native American tribes to shield them from regulations in a recently filed payday loan rates class action lawsuit.

According to lead plaintiffs, George Hengle, Sherry Blackburn, Willie Rose, Elwood Bumbray, Tiffani Myers, Steven Pike, Sue Collins, and Lawrence Mwethuku, lenders are using a “tribal lending model” to offer high interest rates to mainly low-income consumers.

These types of loans are often called “payday loans,” and the plaintiffs say that the companies offering these loans are out of compliance with state usury and licensing laws. However, the companies claim that since they are “owned” by a Native American tribe, they are not subject to state law.

The plaintiffs say they were duped into taking out loans subject to huge interest rates, between 543 to 919 percent. The payday loan companies operate online, and the plaintiffs say they did not know that the loans would not be subject to Virginia law that limits interest rates to 12 percent.

“Under this model, payday lenders originate their loan products through a company ‘owned’ by a Native American tribe and organized under its laws,” alleges the class action lawsuit. “The tribal company serves as a conduit for the loans, facilitating a dubious and legally incorrect claim that the loans are subject to tribal law, not the protections created by state usury and licensing laws.”

“In exchange for the use of its name on the loan, the tribal company receives a small portion of the revenue and does not meaningfully participate in the day-to-day operations of the business.”

The companies accused of making the payday loans include Golden Valley Lending Inc., Silver Cloud Financial Inc., Mountain Summit Financial Inc., and Majestic Lake Financial Inc.

According to the payday loan class action lawsuit, the companies all appear to be operated by National Performance Agency, along with other companies owned by Scott Asner and Joshua Landy. Asner and Landy allegedly formed the companies under the laws of the Habematolel Pomo of Upper Lake, a Native American tribe located in California.

According to the VA payday loan rates class action lawsuit, tribal ownership of the payday loan companies is a sham conducted to shield the non-tribal individuals’ illegal actions.

The payday loan operation was sold to the tribe in 2014, but the majority of the work occurs thousands of miles away from the Tribe’s lands, contend the plaintiffs.

This VA payday loan rates class action lawsuit is not the first to be filed by the states’ residents. A local state newspaper reports that other class actions have popped up over payday loan practices in Virginia.

“We are simply trying to force the lenders to follow our laws,” the executive director of the Virginia Poverty Law Center that assisted with some of the lawsuits told The Virginian-Pilot. “These lenders try to escape accountability for their unlawful loan sharking by claiming immunity from our law because of their phony connection to American Indian tribes. The reality is that the American Indian tribes have no part in the business except for show and the tribes get only 2 percent of the profits. By ignoring our laws, the lenders create an inequitable and unfair marketplace that hurts borrowers and legitimate lenders.”

The plaintiffs are represented by Kristi C. Kelly, Andrew J. Guzzo, and Casey S. Nash of Kelly Guzzo PLC, Leonard A. Bennett, Craig C. Marchiando, and Elizabeth W. Hanes of Consumer Litigation Associates PC, and James W. Speer of the Virginia Poverty Law Center.

The VA Payday Loan Rates Class Action Lawsuit is Hengle, et al. v. Asner, et al., Case No. 3:19-cv-00250-REP, in the U.S. District Court for the Eastern District of Virginia.

Read More Lawsuit & Settlement News:

Nuts ‘N More Class Action: White Chocolate Peanut Spread is Mislabeled

Virgin America Flight Attendants Win Wage and Hour Lawsuit

iPhone X Pixel Class Action Says Apple Misrepresented the Count

Injured at a Trampoline Park in Tennessee? Find Out What You Need to Know.