Minnesota to Island Mountain: Scale Down Interest-Rates and Collections

  • Minnesota AG Keith Ellison reached a settlement with three online lenders operating jointly under Island Mountain Development Group to resolve allegations that the companies violated Minnesota and federal consumer-lending laws by issuing illegal loans to consumers with excessive interest rates.
  • According to AG Ellison’s complaint, these lenders issued thousands of loans to Minnesota consumers that charged between 400 and 800 percent annual interest –well beyond the 36 percent annual rate allowed under Minnesota law. When consumers questioned the interest rates, AG Ellison alleges the companies falsely represented that Minnesota interest rate caps did not apply to the lenders because the lenders were owned by Native American tribes.
  • Under the terms of the settlement, the businesses must comply with Minnesota law when lending to Minnesota residents who sign up for loans while located in the state, cancel any loan issued before the settlement except to allow repayment of the original principal balance, and attribute all past payments towards paying down the original principal balance.