On October 31, 2019, Michigan Attorney General Dana Nessel (“Michigan AG”) filed a complaint in the United States District Court for the Eastern District of Michigan against an online tribal lender for allegedly charging borrowers interest rates in excess of state usury laws and committing unfair, deceptive, and/or abusive acts or practices under the Consumer Financial Protection Act (“CFPA”), 12 U.S.C. § 5531 and § 5536. The Michigan AG simultaneously filed a motion for preliminary injunction to prohibit the small-dollar lender from offering loans in Michigan at rates in excess of Michigan usury limits. The complaint alleged that the online lender charged borrowers hidden fees and interest in excess of 300%, in violation of Michigan’s 7% interest rate cap, Mich. Comp. Laws § 438.31. The Michigan AG also alleged that borrowers who tried to pay off their loans early were told they could not and therefore incurred additional fees.
In communications with the Michigan AG before the complaint was filed, the trial lender purported to be affiliated with a Native American tribe located in California. In its complaint, the Michigan AG argued that the lender was not an “arm of the tribe” and not entitled to assert tribal sovereign immunity. The Michigan AG seeks declaratory and permanent injunctive relief.