Get the latest local business news delivered FREE to your inbox weekly.
A handful of Virginians, stung by triple-digit interest rates, have led a series of class action lawsuits that will bring nearly a billion dollars to more than one million borrowers across the nation.
The Virginians borrowed money from online loan companies that claimed to be owned by three Native American tribes, but were actually operated by a Texas firm, Think Finance, that aimed to take advantage of the tribes’ exemption from state usury laws after regulators shut down an earlier online lending program.
A settlement with Think Finance’s investors was approved by the U.S. District Court in Richmond this week. It broke new ground by reaching into pockets of Think Finance’s investors as well as a firm Think Finance set up in an effort to shield itself from looming regulatory crackdowns.
U.S. District Court in Richmond
Those investors and the shielding company will pay $44.5 million. The settlement enjoins them from getting back in the business.
The court has previously approved settlements totaling more than $870 million with Think Finance, the three tribal shell companies – Plain Green LLC, set up by Chippewa Cree Tribe of the Rock Boy Reservation in Montana; Great Plains Lending, set up by the Otoe-Missouria tribe of Oklahoma; and MobiLoans LLC, set up by the Tunica Biloxi Tribe of Louisiana – as well as a debt collection firm and venture capitalist funds that backed the operation. The firms were incorporated by the tribal governments, but were financed and mainly operated by Think Finance, which received the bulk of the profit.
The earlier settlements include refunds of sums borrowers paid to the lenders totaling more than $103 million and the cancellation of more than $763 million of loans. The former president of Think Finance is paying an additional $7.3 million.
They all deny any wrongdoing.
The Virginians who led the class-action lawsuits had taken out loans charging interest rates as high as 448% on loans ranging in size from $300 to $3,000. One borrower paid $16,210 on a loan bearing interest at 448%, court records show. Almost all the money went to pay ever-rising interest, so that the principal was not paid down and the debt never retired.
The lawsuits asserted that such loans were illegal, since they were over the 12% cap on most loans in Virginia, or even the 36% cap the General Assembly set for payday loans, car title loans and open-end credit lines, including those Virginians arrange online. Those caps, which came after decades of campaigning by consumer advocates, put an end to the triple-digit rates Virginians had been paying on these loans.
Payday loans are very short term borrowings – the idea is to bring in a future paycheck in return for a sum that’s smaller than that check. Car title loans are secured by handing over a vehicle title, so that if the borrower misses a payment, the lender can repossess the car or truck. Open end credit lines are essentially like credit cards, allowing the borrower to pay only a minimum monthly balance. Doing that creates a kind of doubled impact: the principal amount is never retired, and any interest due beyond a borrower’s minimum payment is added to the debt, so that the total of monthly interest due keeps rising in a kind of vicious circle.
“Virginia strengthened its lending laws in 2020,” said Jay Speer, executive director of the Virginia Poverty Law Center.
“We kicked out the payday and car title lenders and brought a better lending marketplace to Virginia,” he said, referring to the departure of many high interest rate loan companies after the state enacted the lending reform measure.
Think Finance had argued that Virginia laws did not apply because the loans were made under tribal law.
The settlements the Virginians won are, together, the largest reached to resolve complaints against a high interest rate loan firm.
They also successfully challenged a business model that other online lenders have used — operating a loan business with a connection to a Native American operation by paying tribes a fee.
Last year’s settlement and this year’s follow-up resolve claims that creditors of Think Finance filed in a Texas bankruptcy court. In a separate action, the U.S. Consumer Finance Protection Bureau won a court order in Montana barring Think Finance and six subsidiaries, prohibiting them from offering or collecting on loans to consumers in 17 states – Virginia is not one – if the loan violates state lending laws and barring them from assisting others in engaging in that conduct.
Earlier this year, another group of Virginians, including some who challenged Think Finance, reached a settlement with other online payday loan companies that charged as much as 919% interest.
That settlement is for $489 million to reimburse some 555,000 borrowers. This lawsuit, also filed in federal court in Richmond, alleged that Golden Valley Lending; Silver Cloud Financial, Inc.; Mountain Summit Financial, Inc.; and Majestic Lake Financial, Inc. all formed under the laws of the Habematolel Pomo of Upper Lake tribe in California, violated federal racketeering laws as well as Virginia’s usury and consumer finance licensing laws.
It also named three Kansas City, Missouri, businessmen, whose firms processed the loans, put up the capital that the tribal companies used to make the loans and collected the bulk of the profit from the business.
The firms advertised online loans for up to $1,000 with a promise that borrowers could be approved in seconds.
One of the Virginians who sued paid a total of $1,127 on three loans, with interest rates of 636%, 722% and 763%. Another, Steven Pike, paid $1,725 on his loan, with an interest rate of 744%, while Elwood Bumbray paid $1,561 toward a loan with a 543% interest rate and Lawrence Mwethuku paid $499.50 on a loan with an interest rate of 919%.
“Although these class action lawsuits drove most of the illegal internet lenders away from Virginia, a few still continue to target Virginians,” Speer said.
“Borrowers should never do business with any lender unless they are licensed in Virginia,” he added.
People can check if a firm is licensed, and following Virginia law, with the State Corporation Commission or by contacting the SCC Bureau of Financial Institutions at 804-371-9657.
Lawyers from the Newport News-based Consumer Litigation Associates and the Kelly Guzzo law firm in Fairfax County brought the lawsuits.
Stacker compiled a list of communities with the most expensive homes in Virginia using data from Zillow. Communities are ranked by the Zillow Home Values Index for all homes as of June 2022. The charts in this story were created automatically using Matplotlib. The most expensive community on the list has a typical home value of $1,517,960 which is 307% higher than the state average of $373,341.
All 30 communities on the list are in the Washington-Arlington-Alexandria metro area.
Read on to see which cities made the list.
You may also like: States where people in Virginia are getting new jobs
– Typical home value: $707,936
– 1-year price change: +11.7%
– 5-year price change: +47.3%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $719,542
– 1-year price change: +9.0%
– 5-year price change: +34.5%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $722,938
– 1-year price change: +6.8%
– 5-year price change: +34.2%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $739,687
– 1-year price change: +8.6%
– 5-year price change: +28.6%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $747,576
– 1-year price change: +6.8%
– 5-year price change: +34.3%
– Metro area: Washington-Arlington-Alexandria
You may also like: Best community colleges in Virginia
– Typical home value: $747,688
– 1-year price change: +17.7%
– 5-year price change: +57.0%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $753,590
– 1-year price change: +14.7%
– 5-year price change: +49.1%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $760,014
– 1-year price change: +13.8%
– 5-year price change: +48.1%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $767,199
– 1-year price change: +13.1%
– 5-year price change: +48.3%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $770,431
– 1-year price change: +12.6%
– 5-year price change: +46.4%
– Metro area: Washington-Arlington-Alexandria
You may also like: Highest-earning counties in Virginia
– Typical home value: $772,969
– 1-year price change: +12.5%
– 5-year price change: +46.2%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $776,087
– 1-year price change: +11.8%
– 5-year price change: +46.6%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $779,055
– 1-year price change: +11.9%
– 5-year price change: +51.9%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $782,383
– 1-year price change: +14.7%
– 5-year price change: +49.3%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $795,791
– 1-year price change: +13.6%
– 5-year price change: +48.1%
– Metro area: Washington-Arlington-Alexandria
You may also like: Most popular baby names for girls in Virginia
– Typical home value: $825,925
– 1-year price change: +10.6%
– 5-year price change: +48.6%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $833,816
– 1-year price change: +3.6%
– 5-year price change: +24.5%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $885,206
– 1-year price change: +11.5%
– 5-year price change: +48.7%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $887,129
– 1-year price change: +10.3%
– 5-year price change: +53.1%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $917,088
– 1-year price change: +7.4%
– 5-year price change: +32.1%
– Metro area: Washington-Arlington-Alexandria
You may also like: See how low property taxes in Virginia are
– Typical home value: $931,109
– 1-year price change: +11.4%
– 5-year price change: +36.7%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $966,022
– 1-year price change: +16.2%
– 5-year price change: +52.9%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $997,250
– 1-year price change: +8.8%
– 5-year price change: +30.3%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $1,000,801
– 1-year price change: +14.3%
– 5-year price change: +49.2%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $1,055,882
– 1-year price change: +9.2%
– 5-year price change: +31.2%
– Metro area: Washington-Arlington-Alexandria
You may also like: Virginia is the #5 state with the lowest Black homeownership gap
– Typical home value: $1,144,066
– 1-year price change: +9.9%
– 5-year price change: +29.0%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $1,157,995
– 1-year price change: +10.0%
– 5-year price change: +49.7%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $1,168,232
– 1-year price change: +18.0%
– 5-year price change: +53.4%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $1,405,062
– 1-year price change: +10.0%
– 5-year price change: +30.3%
– Metro area: Washington-Arlington-Alexandria
– Typical home value: $1,517,960
– 1-year price change: +11.9%
– 5-year price change: +33.9%
– Metro area: Washington-Arlington-Alexandria
You may also like: Highest rated IPAs in Virginia
dr***@ti***********.com
(804) 649-6948
Twitter: @daveress1
Get the latest local business news delivered FREE to your inbox weekly.
Susan and Bob Haynes, whose son displays birds of prey through Earthquest, open new shop for birdwatchers in Target shopping center.
This highway work is scheduled, weather permitting, in the Culpeper District this week. Traffic movements may be restricted and speed limits r…
Main Street Festival cancelled past two years due to COVID, back Sept. 3 for 28th Annual gathering in scenic small-town.
A $5,000 grant last year from The GIANT Company and Keep Pennsylvania Beautiful has supported ongoing project, allowing Culpeper school to redo its gardens.
Tex-Mex food truck brings family rub, recipes to brick-and-mortar in historic building; grand opening is this weekend.
A federal jury awarded David Duvall, 57, $10 million in October 2021 after the panel determined that Duvall proved that his race and gender were motivating factors in Novant Health’s decision to terminate him, according to jury’s verdict form.
It’s been a busy season for baby cheetah cubs at the Metro Richmond Zoo.
Built sometime between 1900 and 1910, the Ferguson House was constructed by the wealthy Ferguson family, whose money came from tobacco.Â
LOS ANGELES—Sales of previously occupied U.S. homes slowed for the sixth consecutive month in July, deepening the housing market’s slide under…
U.S. District Court in Richmond
Get up-to-the-minute news sent straight to your device.
About Author
