Blog Enforcement Watch September 29, 2020

Virginia AG Reaches Settlement with Internet Lender Concerning Short-Term Loans

​On September 29, 2020, the Attorney General for the Commonwealth of Virginia (Virginia AG) announced a settlement with a Nashville-based open-end credit plan​ internet lender, resolving allegations that the lender violated Virginia laws in offering short-term loans.  This settlement results from the Virginia AG’s allegations that the lender’s contracts with its consumers violated the Virginia Consumer Protection Act (VCPA) by misrepresenting the forum where consumer disputes would be resolved, and by charging excessive interest rates.

According to the Virginia AG, the lender offered short-term loans with periodic interest rates as high as 360% in the form of open-end cash advances.  Additionally, between October 2017 and January 20, 2020, the lender’s contract with consumers included a clause that required all parties to either participate in binding arbitration or file suit in small claims court.  Nevertheless, the lender allegedly filed nearly 2,000 collection cases with an attorney in general district courts throughout Virginia, rather than in small claims courts.

As a result of the settlement, the lender will pay $1.2 million in total relief to 1,500 consumers.  The payments include credits to accounts and cash payments; credits of attorneys’ fees and costs awarded in judgments that the internet lender won against consumers on or before February 1, 2020; civil penalties; and attorneys’ fees.  The settlement is documented in an “Assurance of Voluntary Compliance,” and the lender’s compliance will be monitored by the Virginia AG.