On May 4, Virginia Attorney General Mark R. Herring (“VA Attorney General”) announced that its Predatory Lending Unit had filed suit in Virginia state court against a Chicago-based online lender, alleging violations of the Virginia Consumer Protection Act, Virginia Code §§ 59.1-196 to 59.1-207 (“VCPA”).
The complaint alleges that the lender, one of the largest online lenders in Virginia, operated without a Virginia license, and misled borrowers about its licensure status in another state in order to avoid Virginia’s 12% interest rate usury cap. Virginia Code § 6.2-303. Specifically, the complaint alleges that the installment loan agreements’ Utah choice-of-law provisions are void, and that Virginia law, including Virginia’s usury cap, applies to the loans. The VA Attorney General also alleges that the lender attempted to collect on loans from borrowers who were in bankruptcy and entitled to protection from debt collection.
The VA Attorney General seeks civil penalties, restitution for borrowers who were charged the allegedly illegal interest, attorneys’ fees, and injunctive relief prohibiting the lender from violating the VCPA in the future.