Lawsuit Claims Big Picture Loans Charges Interest Exceeding 400 Percent Through ‘Rent-a-Tribe’ Scheme

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Another proposed class action has been filed against Big Picture Loans, LLC, Ascension Technologies, Inc. and an individual who controls the businesses over allegations that the defendants operate an illegal payday lending scheme. According to the complaint, the defendants have attempted to avoid state and federal usury laws by affiliating their lending business with a Native American tribe and exploiting the tribe’s statutory immunity – a business model the suit refers to as a “rent-a-tribe” scheme. The complaint breaks down the alleged scheme as follows:

In a rent-a-tribe scheme, the payday lender—which does most of its lending over the internet—affiliates with a Native American tribe to attempt to insulate itself from federal and state law by piggy-backing on the tribe’s sovereign legal status and its general immunity from suit under federal and state laws. Using this doctrine, lenders argue that because their businesses are located on a Native American reservation or affiliated with a Native American tribe, they are bound by the laws of that reservation or tribe only, not federal or state law.”

Following this model, the defendants have entered into agreements whereby the Lac Vieux Band of Chippewa Indians allows the companies to use its name in exchange for “a small fraction of the revenue” from the usurious loans, the suit alleges. Despite being purportedly operated by the tribe, the defendant companies are allegedly employed by individuals who are not located on the reservation. Even further, the tribe does not fund, service, or collect the loans, according to the complaint, and is minimally involved in the lending business, with most of the generated revenue ending up in the hands of “non-tribal entities.”

The defendants supposedly charge borrowers “triple-digit” interest rates on small loans in violation of several states’ laws. According to the lawsuit, the plaintiffs paid interest rates ranging from 44 percent to over 600 percent on their loans, despite their respective states’ laws prohibiting such high rates.