Think Finance, a national online payday lender and Victory Park Advisors, a private equity firm based in Chicago, reached a settlement agreement with the Pennsylvania Attorney General’s office.
Attorney General Josh Shapiro sued Think Finance and Victory Park Advisors for allegedly engineering a $133 million illegal online payday loan scheme.
Under the settlement, the payday lender will void all remaining balances on the illegal loans as part of its bankruptcy plan. Think Finance’s bankruptcy plan and settlement agreement with the Attorney General’s office is subject to the approval of the Bankruptcy Court and the U.S. Eastern District Court of Pennsylvania.
In addition, the settlement creates a multi-million dollar fund for consumers who were victims of the illegal online payday loan scheme. Consumers who repaid more than the loan principal and the lawful interest rate of 6 percent will receive a check for their refunds in the mail.
Furthermore, the settlement requires the defendants to request credit bureaus to delete any credit reporting on the loans.
“This is a model of how aggressive enforcement by one state can lend itself to nationwide relief for consumers. Our Bureau of Consumer Protection will hold accountable anyone who tries to exploit Pennsylvania consumers by charging illegal interest rates,” said AG Shapiro.
Allegations against Think Finance and Victory Park Advisors
Think Finance allegedly targeted consumers nationwide including 80,000 Pennsylvanians using three websites— Plain Green Loans, Great Plains Lending and Mobiloans. The online payday lender allegedly allowed borrowers to sign up for loans and lines of credit while charging effective interest rates as high as 448 percent.
In Pennsylvania, it is illegal to charge interest rates higher than 200 or 300 percent, according to the Attorney General’s office.
Additionally, Think Finance’s websites allegedly operated under the guise of Native American tribes and the First Bank of Delaware. It was part of their effort to try to evade federal and state laws.
Attorney General Josh Shapiro said the online payday lender’s actions violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law, the Pennsylvania Corrupt Organizations Act, the Pennsylvania Fair Credit Extension Uniformity Act. It also violated the federal Consumer Financial Protection Act of 2010.
The Attorney General accused Victory Park Capital for violating the Corrupt Organizations Act.
The defendants settled the lawsuit without admitting liability or wrongdoing.