On Tuesday, November 26, the Minnesota Attorney General’s office (AG) announced it filed a consent order to resolve allegations that online lenders were charging interest on loans in excess of the amounts prescribed under Minnesota usury laws. Under the consent order, over $1 million in allegedly illegal loans were discharged.
The AG alleged that multiple online lenders operating under a tribally owned holding entity violated Minnesota usury laws by charging interest on short-terms loans in excess of 36%. The AG alleged that some of these loans carried interest rates of 200–800%. The AG further alleged that these lenders misrepresented the legality of the loans and interest rates to consumers when they claimed the usury law was inapplicable to loans originating from a tribal entity.
Under the Consent Order, the lenders may no longer originate short-term loans with interest rates that exceed 36%. Additionally, the lenders may not continue to collect on loans that allegedly violate Minnesota law, which will result in the discharge of over $1 million in loans.
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