Modoc Nation, Payday Lender 500FastCash Facing ‘Rent-a-Tribe’ Class Action Over Loan Interest Rates

New to ClassAction.org? Read our Newswire Disclaimer

The individuals and tribal entities behind payday lender 500FastCash face a proposed class action over their alleged practice of charging illegal, usurious interest rates on loans in nearly every state. 

The 24-page lawsuit says that although 500FastCash holds itself out to be owned and operated by the Modoc Nation, a federally recognized, Oklahoma-based Native American tribe, the lender in truth uses its purported affiliation with the tribe to attempt to shield itself from state usury laws. The lawsuit describes this alleged arrangement as a typical “rent-a-tribe” scheme, whereby a payday lender pays a Native American tribe a small portion of its revenue in exchange for protection via sovereign immunity. 

The suit says that a “significant portion” of the 500FastCash lending operations is handled by third parties not located on tribal lands, and who supply the necessary lending capital for the loans.

According to the case, the plaintiff, a Philadelphia consumer, has paid over the past decade illegal annual interest rates of more than 377 percent and 365 percent on two 500FastCash loans totaling $2,200. The consumer says in the suit that 500FastCash has taken more than $5,000 in electronic transfers from his bank account, mainly to cover the interest on the loans. 

The interest rate cap in Pennsylvania is six percent, the suit states. 

The complaint claims that the Modoc Tribe has been for years “openly inviting” and accepting “rent-a-tribe” partnerships with entities in the payday loan industry, using defendant Modoc Tribe Financial Services Authority, and predecessor Red Cedar Services, Inc., as the vehicle for these arrangements. Previously, Red Cedar engaged a company called AMG Services, Inc. to be the exclusive servicer for 500FastCash loans, the case states. Per the suit, AMG’s former owner and operator, Scott Tucker, was sentenced to more than 16 years in federal prison in 2018 over the $2 billion illegal payday loan scheme. 

Despite the federal punishments for Tucker and Red Cedar, the Modoc Tribe, who forfeited $2 million for its role in the scheme, has not exited the “usurious” lending business, and merely shifted from the Red Cedar moniker to 500FastCash, the case alleges. 

The lawsuit contends that nearly all of the employees of the Modoc Tribe Financial Services Authority live and/or work in Kansas, and not Oklahoma, where the tribe is based. 

“Upon information and belief, the Modoc Tribe operates 500FastCash on behalf of nontribal participants who design and direct the tribal lending scheme that charges unconscionable interest rates in violation of state usury and licensing laws,” the case alleges. 

According to the filing, neither the Modoc Tribe nor defendants Bill Follis, Chief of The Modoc Nation, and Robert Burkybile, Second Chief of The Modoc Nation, have applied for a consumer loan license in Pennsylvania or in other states with similar licensing laws.

The lawsuit looks to cover all persons who, at the time the 500FastCash loan was made, resided in any state other than Nevada or Utah, or the District of Columbia. 

The suit also looks to represent a “subclass” of all persons who made payments on loans from 500FastCash in an amount in excess of the amount of loan proceeds they received. 

Alleged in the complaint are violations of the federal Racketeer Influenced and Corrupt Organizations Act (RICO).

Get class action lawsuit news sent to your inbox – sign up for ClassAction.org’s free weekly newsletter here.