Lending

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On March 5, the New York Attorney General filed a lawsuit against a network of over 30 lending companies and their officers alleging their involvement in a predatory “merchant cash advance” lending scheme that exploited New York businesses through fraudulent loans at “sky-high interest rates.” Continue Reading New York Attorney General Brings $1.4 Billion Lawsuit Against Merchant Cash Advance Lenders

In the latest development to challenges to the CFPB’s 1071 rulemaking, plaintiff trade associations, including the American Bankers Association and the Texas Bankers Association, have filed a motion for summary judgment requesting the court bar enforcement of the Bureau’s Small Business Lending Rule.Continue Reading Trade Groups Continue Fight Against CFPB’s 1071 Small Business Rulemaking

On February 21, the Minnesota Attorney General settled an action against executives of a Montana-based tribal lender for alleged predatory lending practices. In its complaint, filed in October 2023, the AG alleged the company engaged in, among other things, unfair, deceptive and abusive trade practices, unfair collections practices (resulting in a federal RICO charge), unlawful usury practices, and violations of Minnesota’s short-term lending statute, in making small dollar installment loans to consumers bearing interest rates between 474% and 795%. The company allegedly led many Minnesotans to believe that the tribal entity was immune from state laws guarding against interest rate limits on small and short-term loans, and implemented deceptive contractual provisions. Continue Reading Minnesota AG Bans Tribal Lender from Doing Business within the State

On June 23, in Soaring Pine v. Park St Grp, the Michigan Supreme Court held that under certain circumstances, a lender cannot avoid liability for charging illegally high interest rates by including a usury savings clause in loan documents that would reduce the applicable interest rate to the highest non-usurious interest rate permitted by applicable law. The court remanded a private equity firm’s breach-of-contract suit against a house-flipping company back to the trial court to determine whether the lender broke the law.Continue Reading Michigan Supreme Court Limits Applicability of Usury Savings Clauses

On December 18, the Arizona Attorney General issued an opinion on earned wage access (EWA), which determined that fully non-recourse EWA products do not constitute consumer loans subject to consumer loan regulations, and correspondingly, that providers of non-recourse EWA products would not be considered consumer lenders subject to licensure under Arizona law. The opinion found that an EWA product could be identified as fully non-recourse when the provider:Continue Reading AZ Attorney General Concludes Non-Recourse EWA Not a Loan

On June 29, a Florida court issued a final judgment against a Miami-based payday lender and its CEO resolving allegations that the defendants misappropriated investor funds. According to the complaint, the business fraudulently raised upwards of $66 million through the sale of promissory notes to more than 500 Venezuelan-American investors who were told that the company would use their funds to finance payday loans through the offer and sale of “safe and secured” promissory notes. Investors were promised returns of up to 120%, yet it was alleged that the company did not generate revenue to cover its principal and interest payments due to investors.
Continue Reading Payday Lender Ordered to Pay $39 Million in Misappropriated Funds Suit

On May 4, the Connecticut Department of Banking issued a temporary cease and desist order directing a peer-to-peer lending platform that connected borrowers with third-party lenders to cease its lending-related activities on grounds that it was operating as an unlicensed small loan company.  The FinTech company was also cited for operating as an unlicensed consumer collection agency, and for engaging in deceptive acts or practices under consumer protection laws.
Continue Reading Connecticut Stops FinTech from Unlicensed Lending Activities

On February 8, the U.S. District Court for the Northern District of California ruled against three states – California, Illinois, and New York – challenging the OCC’s rule on the “valid when made” doctrine.  In 2020, the OCC issued a final rule codifying the “valid when made” principle by clarifying that the determination of whether interest on a loan is permissible is determined when the loan is made and that a bank’s transfer of a loan to a third party does not impact the validity or enforceability of that interest.
Continue Reading OCC Prevails in Challenge to “Valid When Made” Rule

On February 8, the District of Columbia attorney general announced a settlement with a FinTech company for alleged violations of the District of Columbia Consumer Protection Procedures Act (CPPA) by marketing high-costs loans carrying interest rates exceeding D.C.’s interest rate caps. The complaint, filed in June 2020, alleged that the company offered two loan products to D.C. residents with APRs ranging from 99 to 251 percent, exceeding D.C.’s rate cap limit of  24 percent.
Continue Reading DC OAG Reaches $4 Million Settlement with FinTech Over Claims of Predatory Lending