Lender Settles Fraud Claims with Arizona AG for $4.8 Million

On March 9, 2022 the Arizona Attorney General (AG) filed a proposed consent judgment with a California-based lender and its corporate affiliates in Arizona state court. The operative complaint, filed May 7, 2020, alleged that the defendants violated the Arizona Consumer Fraud Act, A.R.S. § 44-1521, et seq., and state usury laws, by making high-interest, cash-advance loans to Arizona consumers.

The Arizona AG alleged that the defendants unlawfully charged interest on loans ranging between 89% and 169%, with origination fees from $75-500.  These loans resulted in total repayments almost three-times the maximum amount allowed under Arizona law. According to the complaint, the lenders deceived consumers in to taking out “slightly-over-$10,000” loans and concealed the fact that amounts over $10,000 incurred additional interest payments and finance charges. These higher rates and additional charges resulted in APRs allegedly as high as 300%. Further, the lawsuit alleges that the defendants told consumers that they were operating on a South Dakota ​Native American reservation, and thus tribal–not Arizona–law applied.

The consent order enjoins the defendants from collecting on any outstanding loans made to Arizona consumers (totaling over $16 million) and prohibits the defendants, and their non-party principal owner, from engaging in any financial-services business in Arizona. The order also provides that defendants shall pay $4,830,000 in restitution. The Arizona Superior Court entered judgment on March 16, 2022.