Online Payday Loan Lawsuits for Potentially Illegal Lending

They’re looking into whether class action lawsuits can be filed against these online payday lenders over claims that the companies are charging excessive interest rates – sometimes up to 800% – in violation of state and federal laws. A class action lawsuit could potentially help borrowers get back money they may have overpaid in interest and even cancel their outstanding loans.

Are Online Payday Lenders Charging Illegal Interest Rates?

State laws cap loan interest rates at certain percentages to cut down on predatory lending. For instance, 18 states and the District of Columbia limit the annual percentage rate to 36% or less for payday loans.

It is believed that some online payday lenders, however, are charging annual percentage rates in excess of 800% in clear violation of these laws. While these companies claim that a loophole in the law protects them from being sued, attorneys believe otherwise, and class action lawsuits are now starting to be filed.

What’s This Loophole You’re Talking About?

Some online payday lenders are purporting to associate themselves with Native American tribes and claiming they are therefore entitled to the same “sovereign immunity” extended to the tribes. Having “sovereign immunity” means, more or less, that you can’t be sued.

Attorneys believe, however, that in many cases this “association” is more of a disguise. It is suspected that the online payday loan companies aren’t controlled or owned by tribal members – or even operated on tribal land – and that any association is, in fact, a scheme to exploit sovereign immunity and skirt federal and state lending laws. Attorneys also suspect some tribes may be getting a small fee for each loan serviced in exchange for the use of their name. Courts are becoming increasingly skeptical of this setup.

Attorneys believe this practice, sometimes referred to as a “rent-a-tribe” scheme, is widespread among payday lenders and that more lawsuits can be filed on behalf of borrowers who may have been charged illegal interest rates.

How Class Action Lawsuits Can Help

In a successful case, the court could order that any loan agreements it finds to be illegal are void and unenforceable. Furthermore, consumers may be able to get back interest they paid in excess of the legal limit.

What You Can Do

After you get in touch, an attorney or legal representative may reach out to you directly to explain more about what’s involved with filing a class action lawsuit and how you can help. It costs nothing to get in touch, and you’re not obligated to take legal action if you don’t want to.

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