Lawsuit: Big Picture Loans, Ascension Technologies Operate Illegal ‘Rent-a-Tribe’ Scheme

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Another proposed class action has been filed against Big Picture Loans, LLC and two others over claims that the defendants operate an illegal payday loan scheme disguised as a Native American lending business for the purposes of evading state usury laws. Also named as defendants in the lawsuit are Ascension Technologies, Inc. and an individual who runs the businesses.

According to the complaint, the individual defendant engaged the Lac Vieux Desert Band of Lake Superior Chippewa Indians in an agreement that allowed the defendants to operate a payday lending scheme under the tribe’s name and exploit its tribal immunity in exchange for “a measly 2% of the revenue.” From the complaint:

“Defendants have been hiding behind illegal usurpation of tribal authority, using what is often referred to as a ‘rent-a-tribe’ scheme, to systematically violate state usury laws. Specifically, the Defendants set up a payday lending operation that associates with a Native American tribe in an attempt to cloak itself in the privileges and immunities enjoyed by the tribe.”

In other words, by purporting to be run by a Native American tribe, the defendants have been able to surpass state interest caps and charge consumers unlawfully high interest rates on payday loans, the lawsuit alleges. According to the complaint, neither California, Ohio, Wisconsin, nor Texas – the states in which the four named plaintiffs respectively reside – allows lenders to charge more than 28 percent interest on a loan, with California and Texas capping off interest rates at 10 percent and Wisconsin and Ohio specifying even lower rates depending on the types of loans and lenders. The lawsuit alleges the defendants, in violation of these laws, have demanded excessively high interest rates, charging one plaintiff over 600 percent interest.

The case argues that although the lenders purport to be operated by Native Americans, the tribe has minimal involvement in the business’s operations, controlling neither its income nor expenses, while the defendants employ individuals who are supposedly located outside the reservation and are unaffiliated with the tribe.