Consumers Reach $500 Million Settlement with Tribal Lenders Charging 950% Interest

Advocate Andy

Four lenders operated by single tribe forced to cancel loans, pay fines

A class of consumers has asked a Virginia federal judge to approve a $500 million settlement with a Native American tribe (Habematolel Pomo of Upper Lake) in a lawsuit over short-term loans charging interest rates as high as 950%. The rates charged violated state rate caps in states where the consumers reside.

According to Monday's motion, the settlement includes $450 million in debt cancellation and the creation of a $39 million common fund which will be distributed to class members who previously repaid unlawful amounts on their loans.

As part of the settlement, tribal officials will first eliminate the balance on any outstanding loans, and tribal officials have agreed to cease all collection activity and not sell, transfer, or assign any outstanding loans for collection.

The suit involved four lenders - Golden Valley Lending, Silver Cloud Lending, Majestic Lake Financial, and Mountain Summit Financial - all operated by Habematolel Pomo and all accused of charging usurious interest rates.

In fact, these companies were the subject of a suit brought by the Consumer Financial Protection Bureau (CFPB) in 2017.

At that time, the CFPB noted:

Since at least 2012, Golden Valley Lending and Silver Cloud Financial have offered online loans of between $300 and $1,200 with annual interest rates ranging from 440 percent up to 950 percent. Mountain Summit Financial and Majestic Lake Financial began offering similar loans more recently. 

At the time of that suit, then-Director of the CFPB Richard Cordray said:

"We are suing four online lenders for collecting on debts that consumers did not legally owe," said CFPB Director Richard Cordray. "We allege that these companies made deceptive demands and illegally took money from people's bank accounts. We are seeking to stop these violations and get relief for consumers."

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Andy Spears is a middle Tennessee writer and policy advocate. He reports on news around public policy issues - education, health care, consumer protection, and more.

Nashville, TN

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