Attorney General Ellison secures consent order stopping high-cost online lenders and discharging illegal loans

Consent order is result of settlement with consortium of online lenders, halting further lending at illegal 200-800% interest rates and cancelling existing loan balances likely totaling over $1M

Settlement follows February 2024 settlement with other online lenders stopping illegal rates and discharging outstanding debts

November 26, 2024 (SAINT PAUL) — Today, Minnesota Attorney General Keith Ellison announced his office has filed a consent order to resolve an investigation into several online lenders operating under the control of a corporation called LDF Holdings LLC. The investigation concerned the online lenders’ practice of charging exorbitant interest on small loans in violation of Minnesota usury laws and misleading consumers concerning the loans’ validity and repayment obligations.

“I will not allow Minnesotans to be exploited by predatory lenders,” stated Attorney General Ellison. “My mission is to help folks afford their lives, which is why I’m glad to have stopped these illegal and predatory loans and secured a court order that cancels what we estimate are over $1 million in illegal, outstanding loans made to Minnesota residents.”

The Attorney General’s Office reviewed consumer complaints and other information that showed that LDF Holdings’ lenders targeted their online marketing at Minnesota consumers in need of immediate cash and steered those consumers to take out small loans (under $2,000) online. After being signed up for the loans, many consumers reported being shocked to learn they were incurring illegal interest rates, between 200 and 800% annually.

The consent order was filed in Minnesota federal court today and must be approved by the court before it goes into effect. If approved, it will require the cancellation of prior loans and stop future unlawful lending by the following 12 lenders: AvailBlue, Bridge Lending, Bright Star Cash, Cash Aisle, Evergreen Services, Makwa Finance, Lendgreen, Loan at Last, Lendumo, RadiantCash, Sky Trail Cash, and zFunds—all of which operate under LDF Holdings. The Attorney General’s Office believes that thousands of Minnesotans were subject to these illegal lending operations. For just three of the lenders, a debt collector was referred 308 Minnesota loans with balances totaling $302,444.32. The debt collector collected $174,129.87 on these loans through 2022. A full accounting of all of the lenders’ activity and loans subject to cancellation will be provided by the lenders to the Attorney General after the settlement, but the Attorney General’s Office believes the total balances on the loans exceeded $1,000,000.

Such loans violate Minnesota law, which caps rates on certain consumer small and short-term loans at 36%. The online lenders told consumers, however, that Minnesota laws did not apply and did not protect them from predatory rates because of the lenders are tribally owned — LDF Holdings is owned by the Lac du Flambeau Band of Lake Superior Chippewa Indians — and that consumers were legally obligated to repay the loans.

The Attorney General asserts that these representations are false and that Minnesota law does indeed apply to online loans and businesses owned by a sovereign entity, whether it be a state, foreign country, or tribe.

Today’s settlement follows a consent decree entered earlier this year with online lenders Bright Lending, Green Trust Cash, and Target Cash Now, which were owned by a separate tribal entity. Because of the sovereign status of a tribal owner, the lenders cannot be named directly in the Attorney General’s lawsuits or be ordered to pay penalties or other monetary relief. But the law does allow the Attorney General to prevent future violations and harm, including by obtaining a court order halting further illegal lending and collection on unlawful, void loans.

“My approach to this case and other tribal lending is to stop violations and harm while also preserving and respecting the tribes’ sovereign status,” stated Attorney General Ellison. “I am grateful for the defendants’ cooperation in this investigation and agreement to cease further lending and collection activity in Minnesota.”

The lawsuit, which enforces Minnesota’s statutory interest-rate caps (called “usury” laws), follows passage of legislation in 2023, which Attorney General Ellison supported, that closed loopholes allowing excessive fees on payday and other short-term lending and capped interest rates for payday loans at 36%. Attorney General Ellison has prioritized protecting consumers from exploitative and unfair lending practices, including support for legislation last session to close a different loophole for online lenders that partner with out-of-state banks to circumvent Minnesota laws. In September, Attorney General Ellison led a group of 14 attorneys general in supporting a similar Colorado law aimed at preventing online predatory lending in a case challenging the law before the 10th Circuit Court of Appeals.

Minnesota consumers who have taken out loans from the subject lenders 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 file a complaint using the Office’s online forms. The Office can also be reached by calling (651) 296-3353 (Metro area) or (800) 657-3787 (Greater Minnesota).