Lender settles fraud claims with Arizona AG for $4.8 million – Consumer Law

On March 9, 2022, the Arizona Attorney General (AG) filed a motion for consent judgment against a California-based lender and its affiliates in Arizona state court. The effective complaint, filed May 7, 2020, alleged that the defendants violated the Arizona Consumer Fraud Act, ARS § 44-1521, and following.and state usury laws, providing high interest loans and cash advances to Arizona consumers.

The Arizona AG alleged that the defendants illegally charged interest on loans ranging from 89% to 169%, with origination fees of $75 to $500. These loans have resulted in total repayments almost three times the maximum amount allowed by Arizona law. Complaint says lenders tricked consumers into taking out loans “just over $10,000” and concealed the fact that amounts over $10,000 incur interest payments and finance charges additional. These higher rates and additional fees have resulted in APRs allegedly as high as 300%. Additionally, the lawsuit alleges that the defendants told consumers that they were operating on a Native American reservation in South Dakota, and therefore tribal law — not Arizona’s — applied.

The Consent Order bars the Defendants from collecting all outstanding Arizona Consumer Loans (aggregating more than $16 million) and bars the Defendants, and their non-Party Principal Owner , to engage in a financial services business in Arizona. The order also provides that the defendants will pay $4,830,000 in restitution. The Arizona Superior Court released its judgment on March 16, 2022.

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