Consumer Finance Insights
February 5, 2017

Small Dollar Lender to Refund Virginia Consumers $15.335 Million

On January 31, 2017, the Attorney General for the Commonwealth of Virginia (VA AG) announced that it entered into a settlement with a small dollar loan lender. The lender allegedly engaged into a “rent-a-tribe” scheme through a South Dakota company that held itself out as a Native American business entity.  The company purportedly used this “facade” to deceive consumers into believing federal and state law would not apply to any loans it issued.  The VA AG asserted that the company violated of the Virginia Consumer Protection Act (VCPA) because the lender charged more than 12% interest on its loans.  According to the VA AG, the lender charged as much as 230% interest in some cases.

The size of the loans at issue allegedly ranged from $700 to $10,000.  The settlement reached provides for $9.435 million in restitution to 10,000 affected Virginia consumers, $5.9 million in debt relief, credit reporting corrections, $100,000 in civil penalties and attorney’s fees, and an injunction preventing the lender from charging more than 12% interest without applying for an exception.  According to the VA AG, the settlement is the largest settlement that its Predatory Lending Unit has secured against an online lender.

The settlement was filed in the United States District Court for the Eastern District of Virginia, Richmond Division.  It was filed in conjunction with a pending Virginia class action settlement in the same court.