Class Action Alleges AvailBlue Ran Unlawful ‘Rent-a-Tribe’ Lending Scheme

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A proposed class action alleges payday lender AvailBlue has operated what can be described as a rent-a-tribe scheme as a means to charge usurious interest rates on small loans while evading state usury laws.

The 24-page lawsuit alleges defendants Anong LLC (who does business as AvailBlue); LDF Holdings, LLC; and four AvailBlue agents have charged Illinois consumers as much as 600 percent interest on small loans made through availblue.com while purporting to be operated by a Native American tribe. The suit says the defendants’ purported association with the Lac du Flambeau Band of Lake Superior Chippewa Indians is an attempt by the entities to exploit the group’s tribal immunity in exchange for a small percentage of revenues.

In reality, however, the defendants are non-tribal lenders who operate outside of the tribe’s reservation, the lawsuit claims. The case states that non-bank lenders who do not hold a license from the Illinois Department of Financial and Professional Regulation are not permitted to charge more than nine-percent interest on loans.

Nevertheless, the defendants, who are neither a bank nor hold a proper lending license in Illinois, have charged well above the state’s nine-percent interest cap, and have collected from consumers rates exceeding 450 percent, according to the complaint.

“Even the most cursory inquiry into the legality of collecting 450%+ loans made to Illinois residents over the Internet would have disclosed to Defendants that they were violating the law,” the case charges.

The lawsuit alleges the defendants’ relationship with the Lac du Flambeau tribe, who is described in the complaint as a “small, isolated, and economically depressed Indian Tribe located in rural Wisconsin,” is an “elaborate charade” meant to disguise AvailBlue’s unlawful lending scheme. Per the suit, all aspects of the defendants’ operations, including funding, marketing, loan origination, underwriting, loan servicing, electronic funds transfers and collections, are performed by individuals and entities who are not affiliated with the tribe. In exchange for the use of its name, and by extension its tribal immunity, the tribe receives a small percentage of the defendants’ revenues, the suit says.

According to the case, the Lac du Flambeau tribe, “in desperate need of money,” has partnered with over 50 non-tribal investors, exchanging the use of its name for one to three percent of the lenders’ revenues. While a Lac du Flambeau representative rubber-stamps approval for the loans on tribal soil, the rest of the lending process takes place outside the tribe’s reservation and is performed by non-tribal entities, the lawsuit relays.

The case goes on to claim that even if sovereign immunity is legitimately invoked, it “still does not turn an otherwise illegal loan into a legal one.” Per the suit, attempts to skirt state and federal usury laws by exploiting a tribe’s sovereign immunity have been found to constitute criminal conduct.

The lawsuit alleges violations of the Illinois Consumer Fraud Act, the Illinois Predatory Loan Prevention Act and the federal Racketeer Influenced and Corrupt Organizations (RICO) Act.

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