July 16, 2020 – Deal Given Preliminary Approval; AWL Class Action Settlement Website Is Live
The settlement outlined below has been granted preliminary approval. The order granting preliminary settlement approval can be found here, and Senior U.S. District Judge Henry Coke Morgan, Jr.’s memorandum opinion on the deal can be read here.
The official settlement website, including claim forms, important dates and general settlement information can be found at: https://www.awlsettlement.com/
Case Settled for $141 Million; Deal Awaits Court Approval
The lawsuit detailed on this page has been settled for $141 million. The proposed deal awaits preliminary approval from U.S. District Judge Henry C. Morgan, Jr.
As part of the proposed settlement, American Web Loan has agreed to cancel $76 million in loans, covering more than 39,000 in the defendant’s collection, and remit a cash payout of $65 million to borrowers. The deal also calls for American Web Loan’s CEO to resign from his position before the date preliminary approval is handed down and prohibits the company from using class members’ information for debt collection purposes, among other relief.
According to court papers submitted April 16, the settlement was reached with the help of a mediator after extensive arm’s length negotiations.
The motion for preliminary settlement approval can be foundhere.
Four plaintiffs have filed a proposed class action lawsuit on behalf of a group of individuals who they claim have been victimized by a predatory “rent-a-tribe” online lending scheme run and/or participated in by the following defendants:
American Web Loan, Inc.;
MacFarlane Group, Inc.;
The MacFarlane Group, LLC;
Medley Opportunity Fund II, LP;
Medley Capital Corp.;
Oakmont Funding, Inc.;
Dinero Investments, Inc.;
Chieftan Funding, Inc.;
Dant Holdings, Inc.
DHI Computing Service, Inc.;
Smith Haynes & Watson, LLC; and
The plaintiffs allege the scheme in which the above defendants are involved—one ostensibly run by American Web Loan and the individual defendant—preys on people who need cash on an emergency basis or to cover other serious financial challenges. According to the lawsuit, the defendants, after loaning out money, then charge consumers extortionately high interest rates for short-term loans of $300 to $2,500. The case points out the defendants’ interest rates go as high as 726.13 percent, an aspect that is not disclosed to borrowers until after they’ve received a loan. Moreover, the case claims American Web Loan applicants are also never told that disputes concerning their obligations are “subject to an unconscionable and unenforceable” arbitration provision that effectively oversteps all state and federal laws “in favor of the law of the Otoe-Missouria Tribe of Indians,” who the case describes as a small Native American tribe in rural Oklahoma that purports to own and operate American Web Loan.
According to the lawsuit, the defendants and their financial backers attempt to shirk the typical “loan shark” image by utilizing legitimate-looking websites and mobile apps; electronic funds transfers; the involvement of “at least one Wall Street hedge fund and other corporate investors”; and a layered corporate structure that gives off the implication that the companies work with sophisticated law firms and investment banks. The plaintiffs argue that this “attempt at corporate gloss” notwithstanding, the defendants’ unlawful actions embody what the case calls a “rent-a-tribe” lending operation. From the lawsuit:
“In ‘rent-a-tribe’ schemes, payday lenders attempt to circumvent state and federal law by issuing high interest loans in the name of a Native American tribal business entity that purports to be shielded by the principle of tribal sovereign immunity. As alleged herein, the tribal lending entity is nothing but a front for the illegal lending scheme; all substantive aspects of the payday lending operation (e.g., financial backing, marketing, loan origination, underwriting, loan servicing, electronic funds transfers, and collection) are performed by individuals and entities that are unaffiliated with the Native American tribe. In exchange for ‘renting’ its sovereign immunity to the individuals and entities running the payday lending scheme, the cooperating Native American tribe receives a fraction of the revenues generated, a mere 1% in the case of American Web Loan.”
The case asserts the defendants’ alleged enterprise violates the Racketeer Influenced and Corrupt Organizations Act (RICO), the Electronic Funds Transfer Act and the Truth in Lending Act.