Some online lenders charge 900% interest and ignore Virginia law. So borrowers are suing.
A loose-knit group of Virginians, stung by triple-digit interest rates on payday and other loans, is trying to do what the General Assembly won’t — make sure all lenders, including online ones, follow Virginia laws.
In a series of federal lawsuits, they’ve alleged lenders are hiding behind Native American tribal governments in order to get around a Virginia law banning usury and a federal anti-racketeering law that targets loan sharks’ debt collection practices.
The lawsuits challenge recent mergers or purchases of online lending operations by several tribes, arguing they were meant to get around a crackdown by New York State financial regulators on the Internet lenders. New York had challenged deals in which the online lenders contracted with a shell company owned by a member of a tribe to claim immunity from state consumer protection law.
The latest lawsuit, filed last week, alleges that four web sites — Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial — set up in the name of the Habematolel Pomo of Upper Lake tribe in northern California were actually operated by non-tribal members in a Kansas City suburb, including the son of a payday loan executive convicted of fraud and racketeering.
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