Berman Tabacco is co-lead counsel in a class action brought on behalf of individuals who took out high interest rate loans from American Web Loan, an online payday lender that purports to be an arm of the Otoe-Missouria Tribe (the “Tribe”). Plaintiffs allege that certain individuals and entities unaffiliated with the Tribe created American Web Loan in a “rent-a-tribe” scheme designed to circumvent state and federal law, including RICO, usury laws and other laws against high-interest “payday loans,” to make loans of between $300 and $2,500 that carry annual interest rates as high as 726%.
Plaintiffs allege, among other things, that prior to taking out their loans, they were not informed about key loan terms including the interest rate, repayment terms, and total amount of payments owed. The loan documents associated with plaintiffs’ loans – which were not provided to plaintiffs until after they took out their loans – purport to be governed by the law of the Tribe (not the law of the borrower’s home state or federal law), and seek to force all disputes into arbitration that would be governed by tribal law only. Plaintiffs allege that this purported arbitration language is unconscionable and unenforceable.