In March 2018, the Predatory Lending Unit of the Virginia Attorney General Office’s Complaint against online lender Future Income Payments (“FIP”) began with the words of Sir Walter Scott: “what a tangled web we weave when we first practice to deceive.” The lawsuit charged FIP with disguising unlawful loans – in excess of 183% per annum – through using “sales terminology” in an attempt to evade Virginia’s consumer lending laws. On November 15, this web was untangled and resulted in a $50 million judgment against FIP including:
- $20,098,160 in debt forgiveness for borrowers;
- $31,740,000 as a civil penalty;
- $414,474 in restitution;
- $198,000 for costs and attorneys’ fees;
- Injunctive relief preventing FIP from further violating the Virginia Consumer Protection Act; and
- Declaratory relief that FIP’s agreements with Virginia consumers are usurious and illegal.
This swift action embodies Attorney General Mark Herring’s recent effort to vigorously enforce Virginia’s lending laws. In 2015, Herring established the Predatory Lending Unit, proclaiming the unit it to be the “first-of-its-kind,” predicated upon investigating and prosecuting “suspected violations of state and federal consumer lending statutes, including laws concerning payday loans, title loans, consumer finance loans, mortgage loans, mortgage servicing, and foreclosure rescue services.”
Since its creation, the Predatory Lending Unit has filed lawsuits and settled claims against at least five other online lenders alleged to be offering loans in excess of Virginia’s 12% interest ceiling. These lawsuits have resulted in the recovery of more than $22 million in consumer relief. Additionally, Herring’s Predatory Lending Unit intervened on behalf of a Virginia class action against CashCall, an online tribal lender. Six days after Herring intervened, the matter was settled, resulting in 17,046 Virginians receiving $9,435,000 in consumer restitution and the forgiveness of more than $5,900,000 in outstanding debt.
The Complaint against FIP indicates that the Predatory Lending Unit is keeping a keen eye on private litigation and other state regulatory efforts against online lenders with a nationwide footprint. Specifically, the Complaint detailed class actions filed in California, Florida, Alabama, and Massachusetts, along with regulatory settlements by the Massachusetts Attorney General and the New York Department of Financial Services — all against FIP. Even more, the Complaint quoted language from a Consumer Financial Protection Bureau action against FIP, emphasizing the underlying policy against usurious loans. See Complaint at p.4 (quoting CFPB v. Future Income Payments, LLC, No. SACV 17-00303-JLS (C.D. Cal. May 17, 2017), ECF No. 47) (“In the past few years, the income stream market has come under sharp scrutiny for allegedly marketing loans at undisclosed, exorbitant interest rates to vulnerable populations, including veterans and the elderly.”).
In light of the Predatory Lending Unit’s broad license to prosecute violations of Virginia’s lending laws, coupled with their cognizant awareness of independent private and regulatory actions, more regulatory enforcement and litigation in matters involving consumer lending should be expected from the Virginia Attorney General. Lenders must tread carefully and ensure their business practices comply with Virginia law.
 See Commonwealth of West Virginia ex rel. Mark R. Herring v. Future Income Payments, LLC et al., available at http://r20.rs6.net/tn.jsp?f=001h2d4bPkbah4HgXCcxXDtMJYWjxXctk4CtUfZGQdGCaiFwoqAwlAlUETPN3IvUqmOdQBPCIv0lC8E_ayi66UrCCU3siIYYDgay-AxHwfJRjHYvCrCIhJk4lMmV8i5zsQNGe2mA5ky9S2eHXk_RMcuzSjsGin2WLBW3-cLBPikNNlrB7_sWqwOkY-MuUD5LxZxd19KxvGZ_71mVzR4W2PwlHwlS78epi2QwGwo4n_O7FZ1AFZqEbisCBr-D8d7PrFZ&c=83vVL8sS77P30tRQzSARu_8m0QTTinaoXhBzlS3Y8fKD9eAdgK94dg==&ch=tH6T1LlXUBJMybzARXROgv2DTWwh9X2sMYk57tpDwzrdUnxD6soBeQ.
 Virginia Attorney General Press Release, “Attorney General Herring Launching Effort to Combat Predatory Lending, (March 26, 2015), available at https://www.oag.state.va.us/media-center/news-releases/480-march-26-2015-Herring-launching-effort-to-combat-predatory-lending.
 Virginia Attorney General Press Release, ” Herring Warns Virginians About Dangers of Predatory Loans,” (March 7, 2017), available at https://www.oag.state.va.us/media-center/news-releases/901-march-7-2017-Herring-warns-virginians-about-dangers-of-predatory-loans-w-video.
 See Virginia Code § 6.2-303.
 Virginia Attorney General Press Release, “Attorney General Herring Reaches Settlement with Internet Lender,” (October 25, 2017), available at https://www.oag.state.va.us/media-center/news-releases/1072-october-25-2017-ag-Herring-reaches-settlement-with-internet-lender; Virginia Attorney General Press Release, “Attorney General Herring Sues Allied Title Lending, LLC for Making Open-End Credit Loans to Violate Consumer Statutes,” (September 13, 2017), available at https://www.oag.state.va.us/media-center/news-releases/1032-september-13-2017-attorney-General-Herring-sues-allied-title-lending-llc-for-making-open-end-credit-loans-alleged-to-violate-consumer-statutes.; Virginia Attorney General Press Release, “Attorney General Herring Reaches Settlement with Open-End Credit Plan Internet Lender Worth More Than $3 Million,” (November 30, 2017), available at https://www.oag.state.va.us/media-center/news-releases/1092-november-30-2017-ag-Herring-reaches-settlement-with-open-end-credit-plan-internet-lender-worth-more-than-3-million.; Virginia Attorney General Press Release, “Virginia Consumers to Receive $2.7 Million in Relief from Settlement with Internet Lender,” (February 7, 2018), available at https://www.oag.state.va.us/media-center/news-releases/1122-february-7-2018-virginia-consumers-to-receive-2-7-million-in-relief-from-settlement-with-internet-lender.
 See Attorney General of Virginia Intervenor-Complaint here: https://www.oag.state.va.us/consumer-protection/files/Lawsuits/CashCall-Complaint-and-Exhibits.pdf.
 Virginia Attorney General Press Release, “CashCall to Refund Millions to Virginia Consumers Over Illegal Online Lending Scheme,” (January 31, 2017), available at https://www.oag.state.va.us/media-center/news-releases/877-january-31-2017-cashcall-to-refund-millions-to-va-consumers-over-illegal-online-lending-scheme.