LANSING, Mich. — Alleged Predatory Lender Sierra Financial LLC agreed to an assurance of voluntary compliance, months after Attorney General Dana Nessel filed Michigan's first lawsuit against them.
The lawsuit alleges that the company violated the federal Consumer Financial Protection Act.
Sierra Financial is an online lending company incorporated under the laws of California-based lipay Nation of Santa Ysabel. The company has also been known as Tall Grass Fiance and Sierra Lending LLC.
In October 2019, Nessel filed a lawsuit against Sierra Financial after predatory lending and unreasonably high interest rate complaints.
According to Nerd Wallet, predatory lending is a type of practice that uses unfair or deceptive means to convince borrowers to take loans that carry fees, rates, or other terms that benefit the lender at the borrower's expense.
The lawsuit has been dismissed due to the compliance agreement, which includes numerous assurances from Sierra Financial.
Under the agreement, as of March 5, the business can no longer open new loans, and must cease marketing in Michigan. The business will limit collection on any existing loans up to the principal amount.
All repayments will be applied to the principal amount borrowed.
If the company wants to do business in Michigan again, it must give the Attorney General's office 120 day notice.
“Loans with excessively high interest rates are a clear violation of state consumer protection laws, and my office will not stand for predatory lenders that take advantage of people, especially those asking for help to pay their bills,” Nessel said.
Nessel also said,“Many people need financial assistance at one point or another, and companies that employ deceptive tactics and act in bad faith should not be permitted to operate in Michigan.”
Complaints stated that consumers were surprised by hidden terms and unreasonably high interest rates and fee.
Many complainants tried to pay off loans early and were told they could not or had that they had to wait, resulting in additional fees and interest, with interest rates exceeding 300%.
Michigan usury laws cap annual interest rates a 7% and interest rates exceeding 25% are subject to criminal charges.
Michigan Residents can report Consumer Protection Act violations online or by calling 877-765-8388.
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