Modoc Nation, 500FastCash payday lender facing “Rent-a-Tribe” class action lawsuit over loan interest rates
The individuals and tribal entities behind payday lender 500FastCash are facing a proposed class action lawsuit for their alleged practice of charging illegal and usurious interest rates on loans in nearly every state.
The 24-page lawsuit says that although 500FastCash claims to be owned and operated by the Modoc Nation, a federally recognized Native American tribe based in Oklahoma, the lender is actually using its alleged affiliation with the tribe to try to protect itself. state usury laws. The lawsuit describes the alleged arrangement as a typical “rent-a-tribe” system, in which a payday lender pays a Native American tribe a small portion of its income in exchange for protection via sovereign immunity.
The lawsuit says a “significant portion” of 500FastCash’s lending operations are handled by third parties not located on tribal lands who provide the loan capital needed for the loans.
According to the case, the plaintiff, a Philadelphia consumer, has over the past decade paid illegal annual interest rates of more than 377% and 365% on two 500FastCash loans totaling $2,200. The consumer claims in the lawsuit that 500FastCash withdrew more than $5,000 in wire transfers from his bank account, primarily to cover loan interest.
The cap on interest rates in Pennsylvania is six percent, the suit says.
The complaint claims that the Modoc Tribe has years of inviting and accepting “tribe hire” partnerships with entities in the payday loan industry, using the Modoc Tribe Financial Services Authority, and its predecessor, Red Cedar Services, Inc. , as a vector of these arrangements. Previously, Red Cedar hired a company called AMG Services, Inc. to be the exclusive handler of 500FastCash loans, the case says. According to the lawsuit, former AMG owner and operator Scott Tucker was sentenced to more than 16 years in federal prison in 2018 for the illegal $2 billion payday loan scheme.
Despite federal sanctions for Tucker and Red Cedar, the Modoc Tribe, which lost $2 million for its role in the scheme, did not exit the “sharking” lending business and simply went from the Red Cedar moniker to 500FastCash, depending on the deal.
The lawsuit argues that nearly all employees of the Modoc Tribe Financial Services Authority live and/or work in Kansas, not Oklahoma, where the tribe is based.
“Based on information and beliefs, the Modoc Tribe operates 500FastCash on behalf of non-tribal participants who design and operate the tribal loan system that charges unreasonable interest rates in violation of usury and licensing laws of the state,” the case alleges.
According to the filing, neither the Modoc Tribe nor defendants Bill Follis, Chief of the Modoc Nation, and Robert Burkybile, Second Chief of the Modoc Nation, applied for a consumer loan license in Pennsylvania or other states. with similar licensing laws.
The lawsuit seeks to cover all individuals who, at the time the 500FastCash loan was issued, resided in a state other than Nevada or Utah, or the District of Columbia.
The lawsuit also appears to represent an “underclass” of all people who have made payments on loans from 500FastCash for more than the amount of loan proceeds they received.
The complaint alleges violations of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act.
Get class action news delivered to your inbox – sign up for ClassAction.org’s free weekly newsletter here.