Consumer Finance Insights
January 17, 2017

Florida State Agencies Secure $28 Million Coordinated Settlement With Online Payday Lender

On January 12, 2017, the Florida Attorney General’s Office (Florida AG) announced that it and the Florida Office of Financial Regulation (Florida OFR) had entered into coordinated settlements with an online payday lender and its affiliated entities.  The payday lender was accused of charging interest rates prohibited by Florida law.  This settlement comes in the wake of other settlements and enforcement actions against the same online payday lender throughout the country, including actions by other state attorneys’ general (covered hereherehere, and here) and an action by the Consumer Financial Protection Bureau (covered here).  The Florida AG and OFR alleged that the lender ran a “rent-a-tribe” scheme through which the lender would use a Native American tribal entity to originate loans with usurious interest rates higher than would otherwise be allowable under state law.

These settlements resolve an administrative action brought by the Florida OFR (settlement available here), a state lawsuit with the Florida AG (settlement available here), and, if approved by the court, a federal consumer class action (proposed settlement available here).  All told, the lender will be required to create an $11 million pool for consumer restitution, cease all collections efforts on $15 million in outstanding loan balances, and pay fines and costs totaling $2.5 million to the State of Florida.  The lender will also be banned from future lending activities in the state.