AG Ellison sues to stop predatory internet lending in Minnesota

Brings federal lawsuit to shut down illegal lending operation by jointly owned online businesses Bright Lending, Green Trust Cash, and Target Cash Now

Lenders exploit Minnesota consumers in financial need and violate law by charging between 400 and 800 percent interest on small loans

November 1, 2023 (ST. PAUL). Today, Minnesota Attorney General Keith Ellison announced his office has filed a federal lawsuit against individuals that control online lenders Bright Lending, Green Trust Cash, and Target Cash Now for usurious lending and consumer fraud. The three online lenders, operating jointly under control of a single entity called the Island Mountain Development Group, issued thousands of loans to consumers in Minnesota that charged between 400 and 800 percent annual interest, in violation of Minnesota’s usury laws and other federal laws.

“As Attorney General, it’s my job to protect consumers and legitimate businesses from businesses that break the law and take advantage of people who take desperate measures to afford their lives,” Attorney General Ellison said. “These businesses have been engaging in the worst kind of predatory lending and I’m glad to bring this lawsuit to stop the harm they are causing and help people afford their lives. Let this serve as a warning to any other businesses charging these illegal and outrageous interest rates: if you break the law and cheat the people of Minnesota, we will put a stop to it and hold you accountable.”

In the lawsuit, Attorney General Ellison documents experiences of 45 known consumers who were signed up for the defendants’ small loans when they needed cash, only to learn that the loans charged exorbitant and unaffordable interest that required them to pay back much more than the original amounts they borrowed.

Below are just a few examples of the stories shared by Minnesotans who fell victim to the predatory, fraudulent, and usurious lending practices of Bright Lending, Green Trust Cash, and Target Cash Now:

• One complainant from Oakdale reported receiving a $700 loan from Bright Lending and making five payments of roughly $423 on that loan. After paying over $2,000 on a $700 loan, she was told by Bright Lending that almost all her payments had gone to covering the loan’s interest, and that she still owed them money.
• Another complainant from Minneapolis reported that, “I was lent $800.00 and I am now expected to pay, in 22 installments of $200.12 each paycheck, $4,400.00. That's 699.9856% interest and $400.00 per month. I don't understand how this is legal. Payments of $400.00 per month in addition to my medical bills which I'm paying, will very well bankrupt me.” Their loan was provided by Bright Lending.
• A complainant from Willmar reported that, after taking out a $550 loan, “I made payments to Green Trust Cash of $255 per month for three months, which totaled to $765. These payments were very difficult for me to afford. I expected that my $550 debt would be paid off by then, but the $765 I paid mostly went to paying off the high interest on the loan. Because of the interest, I could not afford to continue making payments, so I contacted the Minnesota Attorney General’s Office (AGO) to ask for help.”
• A complainant from Minneapolis who borrowed money from Target Cash Now reported that, “During the pandemic I made a very stupid mistake. … I borrowed $1200 and the interest rate is 499.94%. I will have to pay $3880.90 in interest over 10 months. Each monthly payment is $508.09 which is causing me a financial hardship.”

When consumers reviewed loan documents or complained about the interest, they were told that Minnesota law capping rates does not apply and that they have no real form of redress because the lenders operate online and are owned by Native American tribes. However, the lenders’ scheme is illegal and their statements to consumers were false. A business that sells in Minnesota must comply with Minnesota’s consumer-lending laws, regardless of whether it offers and makes the loan over the internet or a brick-and-mortar store. The law also applies to businesses even if they are owned by a sovereign entity, whether it be a state or tribal entity.

The sovereign status of the lenders’ owner, however, prevents a direct lawsuit against the tribal entity itself. It also limits relief available to an injunction that stops further illegality by the company’s controlling officers; monetary relief and penalties are not available.

The lawsuit, which enforces Minnesota’s statutory interest-rate caps (called “usury” laws), comes on the heels of a new state law passed earlier this year that closes loopholes allowing excessive fees on payday and other short-term lending, and caps interest rates for payday loans at 36 percent. The campaign for the rate-cap bill was led by Minnesotans for Fair Lending, a coalition of religious, nonprofit, and other organizations seeking to end predatory lending in Minnesota.

“Exodus Lending has a mission of moving Minnesotans out of predatory debt and into financial stability. Since we began our program in 2015, we have refinanced 32 loans carrying average interest rates of 519% across three lenders operating under Fort Belknap Community,” said Anne Leland Clark, Executive Director of the nonprofit Exodus Lending, which refinances predatory loans at 0% rates and spearheaded the Minnesotans for Fair Lending coalition. “While these loans may have been helpful in solving an immediate financial need or shortfall, they caused financial harm in the long run. We believe all Minnesotans deserve access to credit and capital that protects and builds rather than strips wealth.”

While the overall scope of the defendants’ lending is not fully known yet, the Attorney General’s investigation obtained information from a debt collector showing that 634 of the defendants’ loans were in default and referred to collections from 2018 to 2022, with balances on those defaulted loans totaling over $608,000. Given typical default rates on such loans, the Attorney General’s Office estimates that the lenders issued thousands of loans in Minnesota during that time that violate the law. The lawsuit aims to send a clear message that such predatory lending will not be permitted in Minnesota.

Minnesota consumers who have taken out loans from Bright Lending, Target Cash Now, and Green Trust Cash in Minnesota can contact the Attorney General’s Office for further information about the lawsuit. Minnesota consumers subject to loans from other brick-and-mortar or online lenders that charge excessive interest rates or that engaged in fraudulent or other unlawful conduct can also file a complaint by calling (651) 296-3353 (Metro area) or (800) 657-3787 (Greater Minnesota).