This is a Class Action Complaint brought to obtain declaratory, injunctive and monetary relief on behalf of a class of individuals who responded to advertisements made by a group of affiliated South Dakota business entities offering consumer loans via the Internet. The lenders conspired to charge illegal interest rates and defraud consumers by stating that the lenders and collectors are exempt from United States laws because of an affiliation with the Cheyenne River Sioux Tribe (“Tribe”). The loans had a minimum annual percentage rate (APR) of 89.68 o/o-ten times the legal limit-and up to 342.86 %. The usurious nature of the interest rates renders them void; similarly, the deceptive and misleading nature of the groups’ marketing materials and loan documents violate state consumer protection laws.
The Lending Defendants, PayDay Financial, LLC and Western Sky, LLP, marketed fast, accessible, low-barrier loans to Plaintiffs and members of the class; in doing so, they preyed upon individuals who needed access to money as quickly as possible in order to meet their most basic human needs. The Lending Defendants took advantage of the weak and necessitous position of their target consumers by charging astonishingly high interest rates knowing that people will do whatever it takes to provide food for their family or keep their home out of foreclosure–even if the measure would only last a short time. The Lending Defendants provided the proverbial “desperate measure” for the desperate times in which Plaintiffs and members of the class found themselves. Loan fees and interest rates were lower, but still usurious, for higher dollar amount loans thus incentivizing borrowers to take more money than they needed.
As alleged, the Lending Defendants know that their interest rates are usurious so they developed what they, upon information and belief, believe is a “legal loop hole”-requiring Plaintiff and members of the class to agree to an exculpatory clause that purportedly extinguishes any right the consumer has to apply United States law to the relationship. The loan agreements state that only the Tribe’s law will apply to the relationship between consumers and the Lending Defendants and the consumer may not sue in any court of the United States or any state. But the loan agreement has nothing to do with Tribal law. The Lending Defendants are South Dakota limited liability companies marketing and providing services to consumers throughout the United States using web servers located in the State of California.
As claimed, the Lending Defendants cannot avoid the courts and laws of South Dakota, Minnesota, Virginia, or Texas–or the courts and laws of any other state or the United States by the mere fact that its controlling owner is a member of an American Indian tribe. Employees are mostly tribal members and their primary place of business is on tribal land. Similarly, Defendants cannot contract away their duty to follow the laws of each and every state in which they do business. This lawsuit seeks to end the Lending Defendants’ illegal scheme to skirt the law and make consumers whole by returning Defendants’ ill-gotten profits to consumers they have harmed.