Class Action Claims Rosebud Lending Used Tribal Connection to Thwart State Usury Laws

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A proposed class action lawsuit has been filed over a “predatory” lending scheme that six plaintiffs allege was perpetrated by Rosebud Lending executives in tandem with Fintech Financial, LLC. The lawsuit claims Rosebud Lending charged up to 790 percent interest on small-dollar “payday” loans while purporting to operate as an extension of a federally recognized Native American tribe in order to exploit the tribe’s immunity from litigation under federal and state lending laws.

Formed by Rosebud Economic Development Corporation (REDCO), Rosebud Lending, the lawsuit alleges, holds itself out as “an economic development arm and instrumentality of” the Rosebud Sioux Tribe in order to avoid liability under Virginia’s Consumer Finance Act, which prohibits lenders from charging more than 12 percent interest on loans without first obtaining a consumer finance license from the state. Despite these alleged ties to the tribe, most of Rosebud Lending’s business was performed outside tribal lands by non-affiliated third parties, the lawsuit argues.

One such party was defendant Fintech Financial, who the suit claims provided capital for Rosebud’s loans and, in return, “generated large profits from its investment in the scheme.” The case claims the “vast majority” of profits earned from Rosebud’s lending practices did not benefit the Rosebud Sioux Tribe, and were instead funneled to non-tribal outsiders who maintained strict control over the business.

According to the case, Rosebud Lending has offered to Virginia borrowers illegal, high-interest loans under several names, including Advance Me Today, 1800899Cash, First Pay Loans, My Quick Wallet, Zoca Loans, Pixy Cash, QCredit, Big Star Credit, Arrow Financial, and Arrow Credit. These loans, the lawsuit alleges, target some of the most vulnerable borrowers who, “in their moment of despair,” agree to accept loans with interest rates that can exceed 65 times the legal limit. The lawsuit claims the defendants, among whom are leaders of the Rosebud Sioux Tribe and Rosebud Lending, have harmed borrowers through this “highly problematic” scheme and, without the court’s intervention, will continue to “economically devastate borrowers and their communities.