Minnesota Attorney General Keith Ellison has announced a significant legal settlement involving several online lenders under the corporation LDF Holdings LLC. This development follows an investigation into their lending practices, which allegedly involved charging interest rates ranging from 200% to 800% on small loans, violating Minnesota's usury laws.
Ellison emphasized his commitment to protecting residents from predatory lending practices, stating, "I will not allow Minnesotans to be exploited by predatory lenders." He expressed satisfaction with the outcome that could lead to the cancellation of over $1 million in illegal loans made to Minnesota residents.
The Attorney General's Office identified that these lenders targeted Minnesota consumers in need of quick cash through online marketing. Many consumers were reportedly unaware they were subject to exorbitant interest rates upon signing up for loans under $2,000.
A consent order was filed in federal court and awaits approval. If granted, it will cancel previous loans and halt future illegal lending activities by 12 lenders operating under LDF Holdings. The office estimates thousands of Minnesotans have been affected by these operations.
The loans violated state law capping interest rates at 36% for certain consumer loans. The lenders claimed immunity from Minnesota laws due to tribal ownership; LDF Holdings is owned by the Lac du Flambeau Band of Lake Superior Chippewa Indians. However, Ellison asserts that such claims are false and that state law applies regardless of tribal ownership.
This settlement follows a similar agreement earlier this year with other tribal-owned lenders. Despite the sovereign status preventing direct lawsuits or monetary penalties against them, the law permits action to stop further violations and collection on unlawful loans.
Ellison noted his approach balances halting violations while respecting tribal sovereignty: "My approach to this case and other tribal lending is to stop violations and harm while also preserving and respecting the tribes’ sovereign status."
The lawsuit aligns with legislative efforts supported by Ellison in 2023, which closed loopholes allowing excessive fees on payday loans and capped their interest rates at 36%. Ellison has prioritized consumer protection against exploitative lending practices.
Minnesota consumers impacted by these or similar high-interest loans can contact the Attorney General’s Office for assistance or file complaints using available resources.