Pennsylvania Attorney General Kathleen G. Kane has filed a consumer protection lawsuit
against a Texas-based company for allegedly engineering an illegal payday loan scheme over the Internet. According to the lawsuit, the defendants allegedly targeted Pennsylvania consumers in violation of state law.
The civil lawsuit was filed in the Court of Common Pleas of Philadelphia County against Think Finance Inc. (formerly ThinkCash), TC Loan Services LLC, Elevate Credit Inc., Financial U LLC and former CEO Kenneth E. Rees. Rees and the companies use an address in Fort Worth, Texas, as its headquarters.
Payday loans, which typically charge interest rates as high as 200 or 300 percent, are illegal in Pennsylvania. According to the lawsuit, Think Finance targets consumers in Pennsylvania using three Native American tribes, who function as the apparent lender, as a cover. In turn, Think Finance earns significant revenues from various services it charges to the tribes.
According to the lawsuit, before establishing these tribal partnerships, the company allegedly used the cover of a rogue bank based in Center City Philadelphia, in what is commonly referred to as a “rent-a-bank” scheme, until the federal government shut down the bank.
A Think Finance press release in 2013 stated the company had more than $500 million in revenues - up from $100 million in 2010 - and had provided more than $3.5 billion in loans to 1.5 million consumers in the U.S. and internationally.
Also named in the lawsuit is an Internet marketer, Selling Source LLC, which used its “MoneyMutual” website and television commercials to generate online leads for high-rate lenders, including at least one tribal lender.
Selling Source allegedly made referrals of Pennsylvania residents to the scheme for a commission, even after it was ordered to stop those referrals in a 2011 agreement with the Pennsylvania Department of Banking.
The lawsuit also includes various debt collectors as defendants, including the Washington-based law firm of Weinstein, Pinson and Riley PS, Cerastes LLC and National Credit Adjusters LLC, which are allegedly utilized to collect debts derived from illegal loans.
Kane explained that in operating and participating in the scheme, the defendants are accused of violating several Pennsylvania laws including the Unfair Trade Practices and Consumer Protection Law, the Corrupt Organizations Act and the Fair Credit Extension Uniformity Act.
In the lawsuit, Kane seeks injunctive relief to prohibit defendants from violating Pennsylvania law, restitution for all consumers harmed by the scheme, civil penalties of up to $1,000 for each violation of Pennsylvania law, civil penalties of up to $3,000 for each violation involving a senior citizen; and notification of credit bureaus to remove all negative information related to the scheme and all references to any of the defendants from consumers’ credit reports.
Kane says the Bureau of Consumer Protection has already received information from numerous complaints against these companies, and she believes there are many more victims who have not yet filed a complaint.