District Court Approves $ 18.5 Million Rent-A-Tribe Payday Loan Settlement

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On February 25, the U.S. District Court for the Eastern District of Virginia allowed preliminary approval of an $ 18.5 million class action suit regulation to resolve allegations, including violations of the Corrupt and Racketeer-Influenced Organizations Act, state usury and loan laws, and wrongful enrichment against a financial technology company and a corporation tribal (defendants). According to complaint, the company escaped the limits of the usury law by attempting to use the sovereignty of an Indian tribe (“rent-a-tribe”) to issue payday loans bearing annual interest rates in percentage 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.



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