Consumer complaint received 2018-10-03
Product: Payday loan, title loan, or personal loan — Installment loan
Issue: Charged fees or interest you didn't expect — 
Company: Rosebud Economic Development Corporation (FL)

On XX/XX/XXXX I took out a {$1000.00} loan from Rosebud Lending XXXX  d/b/a XXXX. My address at the time was XXXX XXXX XXXX XXXX, XXXX, Virginia XXXX and my email address was XXXX. I paid off the loan in full on XX/XX/XXXX. This loan was illegal in Virginia ( my home state at the time ) because the APR of 690.79 % represented an egregious violation of Virginia 's usury laws. I made a total of {$2600.00} in payments on this loan as follows : {$300.00} paid XX/XX/XXXX {$300.00} paid XX/XX/XXXX {$300.00} paid XX/XX/XXXX {$300.00} paid XX/XX/XXXX {$300.00} paid XX/XX/XXXX {$1000.00} paid XX/XX/XXXX {$17.00} paid XX/XX/XXXX {$2600.00} total payments made minus {$1000.00} original amount lent equals {$1600.00} in illegal, usurious interest that I paid on this loan. The laws in Virginia very clearly define usurious lending contracts, and those laws do NOT grant exceptions for lenders that claim to be governed by tribal lending authorities in other states. In other words, just because a tribal authority states that a 690 % APR is acceptable does NOT give a tribal lender the right to offer such loans in blatant violation of consumer protection laws in any state. In fact, significant case law exists in Virginia whereby class action AND individual suits alike have been successfully filed by Virginia consumers and tried in Virginia courts. 

Virginia Code 6.2-303 specifically mentions contracts for more than legal rate of interest and states that " no contract shall be made for the payment of interest on a loan at a rate that exceeds 12 percent per year. '' Virginia Code 6.2-305 goes on to specify that borrowers can recover twice total usurious interest paid from lenders, and it states that " if interest in excess of that permitted by an applicable statute is paid upon any loan, the person paying may bring an action within two years from the first to occur of : ( i ) the date of the last scheduled loan payment or ( ii ) the date of payment of the loan in full, to recover from the person taking or receiving such payments : 1. The total amount of the interest paid to such person in excess of that permitted by the applicable statute ; 2. Twice the total amount of interest paid to such person during the two years immediately preceding the date of the filing of the action ; and 3. Court costs and reasonable attorney fees. '' As such, in order for Rosebud Lending XXXX d/b/a XXXX  to fully comply with Virginia law and avoid litigation, I must receive a total refund of {$3200.00} no later than XX/XX/XXXX. If I do not receive this refund by that date, my attorney will proceed to file suit against Rosebud Lending XXXX   d/b/a XXXX in a Virginia court. 

Many " tribal '' lenders make the false argument that they aren't subject to state usury laws due to sovereign immunity. This statement is inaccurate because sovereign immunity ONLY applies to tribes themselves not being subject to State law, although tribes must still abide by Federal laws as decided by Washington v. XXXX XXXX XXXX XXXX XXXX XXXX in XXXX. Sovereign immunity is applicable to lending businesses ONLY when a tribe itself ( not a company affiliated with another company owned by one tribal member ) creates, owns, operates, controls, and receives the revenues AND can provide clear and compelling evidence to prove it. In other words, sovereign immunity would apply only if a tribe itself was making loans to customers using its own capital and such is not the case with Rosebud Lending XXXX  d/b/a XXXX. Moreover, there are very prominent and recent Federal and State court cases to prove that sovereign immunity is NOT a valid argument that lenders can use to justify violating Federal and State usury laws : 1. The Consumer Financial Protection Bureau ( CFPB ) and the Federal Trade Commission ( FTC ) have recently and successfully sued " tribal '' lenders in Federal court for violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S. Code 1964. In those cases, the courts rejected lenders ' claims that their loans are governed only by tribal law. The conviction of XXXX XXXX is a very high profile example of this. XXXX was convicted in XX/XX/XXXX of 14 criminal charges relating to predatory online lending, and was subsequently sentenced to 16+ years in Federal prison. He  unsuccessfully attempted to avoid prosecution by claiming that his lending companies were owned and operated by tribes in Nebraska and Oklahoma. However, he was unable to provide any evidence to support those claims. 

2. In XX/XX/XXXX, the California Supreme Court ruled in People v. XXXX XXXX XXXX ( XXXX  ) that lenders claiming to be " arms of the tribe '' must actually PROVE that they are tribally owned and controlled businesses entitled to share in the tribe 's immunity. While Rosebud Lending XXXX  d/b/a XXXX loan agreement state that the company is wholly owned and controlled by the XXXX XXXX XXXX, that statement alone will NOT stand up in any court because in-depth proof is required. In People v. XXXX, the California Supreme Court ruled that lenders must do more than just submit documents and tribal declarations stating that the tribe owns the businesses. According to that ruling, the court must see evidence that explicitly highlights what purpose the lending business serves, how it was created, AND ( most importantly ) HOW the tribe controls or oversees the business. Lenders may receive tribal immunity ONLY if they are able to furnish sufficient evidence.

In the cases mentioned above, Federal and State courts also rejected the " arbitration '' clauses that the lenders wrote into their contracts. The courts ruled that such clauses require disputes to be resolved in forums that don't actually exist ( i.e. arbitration in front of a tribe ) and before an arbitrator doesn't have the authority to apply any Federal or State laws. As such, arbitration is not a valid legal option for settling this dispute. In addition, the Federal Trade Commission ( FTC ) has  successfully sued lenders that claim to have tribal affiliations. This is clearly articulated in the following FTC press release : https : //www.ftc.govXXXX 

Once more, in order for Rosebud Lending XXXX d/b/a XXXX  to fully comply with Virginia law and avoid litigation, I must receive a total refund of {$3200.00} no later than XX/XX/XXXX. This refund can be issued to me via ACH deposit into the checking account that was used to deposit my original {$1000.00} loan in XX/XX/XXXX. If I do not receive this refund by that date, my attorney will proceed to file suit against Rosebud Lending XXXX  d/b/a XXXX  in a Virginia court.