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Some banks charging 150% loan interest rates
Christine Westbrook’s life is unrelenting. When she’s not working a full-time job as a medical assistant, the Hastings mother is busy supporting her five children. After she fell on hard financial times in 2019, Westbrook desperately applied for a loan online.
(FOX 9) - Minnesota Attorney General Keith Ellison announced on Tuesday he filed an order stopping a group of online lenders from charging predatory interest rates that Ellison said violated state law.
Background
The FOX 9 Investigators highlighted the problem with predatory lending earlier this year in a review that found some lenders would charge exorbitant interest rates, with rates ranging up to 350 percent.
The investigation found these out-of-state lenders were using a loophole to get around state caps on interest rates.
In 2023, Attorney General Keith Ellison announced a lawsuit against several predatory lenders.
What's new?
On Tuesday, Ellison announced his office had filed a consent order against several online lenders operating under a corporation called "LDF Holdings LLC".
The corporation was behind 12 companies, the attorney general's office said, including:
- AvailBlue
- Bridge Lending
- Bright Star Cash
- Cash Aisle
- Evergreen Services
- Makwa Finance
- Lendgreen
- Loan at Last
- Lendumo
- RadiantCash
- Sky Trail Cash
- zFunds
According to Ellison, LDF Holdings argued it was exempt from Minnesota's interest rate cap because they are tribally owned. But Ellison says that's not the case – Minnesota's laws apply to businesses owned by a sovereign entity, including a tribe.
LDF Holdings is owned by the Lac du Flambeau Band of Lake Superior Chippewa Indians.
The consent decree filed by Ellison's office on Tuesday will resolve the investigation. It requires the companies to obey Minnesota's laws in future loans and cancels prior loans.
Context
The recent consent decree follows another consent decree filed earlier in the year against online lenders Bright Lending, Green Trust Cash, and Target Cash Now, which are also owned by a separate tribal entity operating under a company named Island Mountain Development Group.
However, Ellison's office says the attorney general is pushing lawmakers to approve legislation to close a separate loophole being exploited by out-of-state lenders.
Minnesotans who were victimized by the companies above can reach out to the AG's office for more information on the lawsuit.