District Court Approves $ 18.5 Million Rent-A-Tribe Payday Loan Settlement
On February 25, the United States District Court for the Eastern District of Virginia granted preliminary approval of an $ 18.5 million class-action settlement to resolve allegations, including violations of the law on influenced racketeers and corrupt organizations, state usury and loan laws, and unjust enrichment against a finance company, tech company and tribal corporation (defendants). According to the complaint, the company escaped the limits of usury of state law by attempting to use the sovereignty of an Indian tribe (“rent-a-tribe”) to issue payday loans. carrying annual percentage interest rates of up to 460%. Although the defendants have denied any wrongdoing, they agreed, among other things, (i) to cancel the loans made during the period covered by the action “on the basis that the debt is disputed”; (ii) no longer sell any outstanding debt and cease all collection activity; (iii) contact all consumer reporting agencies to request the permanent removal of any default mark on loans taken out during the class action period; (iv) no longer sell the personally identifying information of group members to third parties; and (v) establish a fund of $ 18.5 million to cover fees, service rewards, attorneys’ fees and cash rewards to class members.