Michigan AG Nessel Files Lawsuit To Stop Online Lender Charging More Than 300 Percent In Interest Rates
LANSING, Mich. (CBS DETROIT) - Michigan Attorney General Dana Nessel filed the state's first ever lawsuit alleging violations of the federal Consumer Financial Protection Act as part of a full-court press to stop the predatory practices of online tribal lender Sierra Financial.
To protect Michigan consumers, earlier this month Nessel simultaneously filed a lawsuit and motion for preliminary injunction in the United States District Court for the Eastern District of Michigan to prohibit Sierra Financial and its officers from offering or otherwise providing exorbitant interest rate loans in Michigan.
After reviewing several complaints against the company, Nessel's Corporate Oversight Division sent a letter to Sierra Financial demanding additional information on what appeared to be a blatant disregard for the state's usury laws. When the company responded to the Department's letter, it claimed Michigan law did not apply because of its relationship to the Iipay Nation of Santa Ysabel, which is located in California.
Sierra Financial, however, offers loans to Michigan residents. Federal law is clear: Native Americans operating outside of tribal boundaries are subject to any and all applicable state and federal laws.
The Michigan complaints received by Nessel's office since 2014 detail similar problems: Consumers filed for loans only to be surprised by hidden terms and exorbitant interest rates and fees. Many of the complainants attempted to pay off their loans early and were told they could not or that they had to wait, resulting in additional fees and interest being owed, often exceeding interest rates of 300 percent. Michigan usury laws cap annual interest rates at 7 percent and interest rates exceeding 25 percent are subject to criminal charges under Michigan usury laws.
These terms and actions also constitute unfair, deceptive and abusive acts and practices under the federal Consumer Financial Protection Act.
"Using tribal status to circumvent state and federal laws designed to protect Michigan residents will not be tolerated," Nessel said. "Predatory lenders have no place in our state and our department will use every available resource to protect Michigan residents from extortive tactics."
A copy of the lawsuit can be read here.
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