Minnesota AG Sues Three Tribal Lenders
Earlier this month, Minnesota Attorney General (AG) Keith Ellison filed a federal lawsuit against three Tribally-owned online lending companies, which his office says “issued thousands of loans to consumers in Minnesota that charged between 400 and 800 percent annual interest, in violation of Minnesota’s usury laws and other federal laws.”
“Let this serve as a warning to any other businesses charging these illegal and outrageous interest rates: if you break the law and cheat the people of Minnesota, we will put a stop to it and hold you accountable,” Ellison said in a press release.
Ellison said that consumers who complained to the lenders were told that state and federal laws don’t apply to the tribal-owned Island Mountain Development Group, but Ellison said that even sovereign-owned entities “must comply with Minnesota’s consumer-lending laws.” However, as the Attorney General’s press release admits, the sovereign status of the lenders’ owner prevents a direct lawsuit against the tribal entity, and it limits the relief available to an injunction that stops more alleged illegality by the companies’ controlling officers. Monetary relief and penalties are not available.
A new state law was passed in Minnesota earlier this year that closes loopholes that allow excessive fees on payday and other short-term loans, as well as caps interest rates for payday loans at 36 percent. The bill was led by Minnesotans for Fair Lending, a coalition of organizations seeking to end predatory lending.