“Minnesota Takes Action Against Tribal Lenders: What You Need to Know”
In a recent development, a settlement has been reached in Minnesota that will put an end to a payday-like loan operation, adding pressure on the Lac du Flambeau Band of Lake Superior Chippewa Indians. The tribe has been under scrutiny for its high borrowing rates across the country, with allegations of violating state laws on lending rates, consumer fraud, deceptive trade, and false advertising.
The settlement, agreed upon shortly before Thanksgiving, involves a civil suit filed by Minnesota Attorney General Keith Ellison against the tribe’s lending arm, LDF Holdings. The lawsuit accused the tribe of charging Minnesotans exorbitant annual interest rates ranging from 200% to 800%, well above the state’s legal limits. As part of the consent decree, the tribe’s top official denied the allegations but agreed to cease lending to Minnesota residents unless they comply with state usury laws and licensing requirements.
Tribal Council President John Johnson Sr., the sole defendant in the case, also pledged to forgive all outstanding loans to Minnesotans, amounting to over $1 million. Despite the settlement, Johnson has not indicated any plans to exit the lending business or change the tribe’s practices, as reported by ProPublica.
The move by Minnesota to crack down on tribal lending operations comes after ProPublica’s in-depth investigation into LDF’s loan practices, revealing the tribe’s significant presence in the tribal lending industry and its impact on borrowers nationwide. The state attorney general’s office received numerous complaints from consumers describing financial hardship due to the high interest rates imposed by LDF Holdings.
The settlement in Minnesota follows a similar enforcement action against the Fort Belknap Indian Community in Montana, which also barred the tribe from making future loans in the state. Minnesota has strengthened its usury laws, imposing stricter APR caps to protect consumers from predatory lending practices.
While tribal lenders argue that they operate under sovereign rights and immunities, states like Minnesota are taking action to hold them accountable for violating state laws. The settlement with LDF Holdings marks a significant step in addressing predatory lending practices and protecting consumers from excessive interest rates.
As the legal battle continues, the outcome of these settlements could have far-reaching implications for tribal lending operations and the regulation of high-interest loans in the United States. Stay tuned for further updates on this developing story.