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WBK Industry News - State Regulatory Developments

Payday Lender Claiming Tribal Immunity Settles Lawsuits with Florida, D.C.

A payday lender recently reached settlements with Florida and the District of Columbia attorneys general to resolve lawsuits accusing it of violating consumer financial protection laws, despite the lender’s claims of tribal sovereign immunity. While the lender did not admit liability, the lawsuits had alleged that it had violated consumer protection laws by offering loans with illegally high interest rates.

The lender was accused of violating debt collection laws, by charging interest rates that were higher than those allowed by state law. The lender had claimed that it was not subject to Florida or D.C. laws because it only bought and serviced loans that had been issued by an entity that was an affiliate of a Native American tribe. The issuing entity was also sued in the Florida litigation, and settled with the Florida attorney general.

Pursuant to the terms of the settlements, the lender will pay the state of Florida $1.25 million, and will set aside $11 million for restitution to Florida borrowers. In addition, the lender is prohibited from enforcing or collecting on over $15 million in outstanding Florida loans.

The lender will also pay nearly $3 million to resolve the D.C. allegations. This includes the return of payments of over $1.8 million made by D.C. consumers, over $1 million in outstanding debt forgiveness, and $100,000 in penalties and costs.

The lender has settled similar lawsuits in other states across the country, and is currently appealing a ruling by the Central District of California, which held it subject to state interest rate laws for loans it purchased that had been issued by a tribal entity.

The Florida Stipulated Final Judgment and Order is available here: http://myfloridalegal.com/webfiles.nsf/WF/JMAR-AHJRDH/$file/Western+Sky+Final+Judgment.pdf.