Banking and Finance Law Daily Class of Minnesota consumers certified against pay-day lender
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Tuesday, January 15, 2019

Class of Minnesota consumers certified against pay-day lender

By Laura Lefkow, J.D.

Finding that a class action would fairly promote the interests of the class and ensure judicial economy, the federal district court in St. Paul, Minnesota certified a class of consumers challenging MoneyMutual’s payday-lending practices under Minnesota statutes and common law. Even though the consumers’ proposed method for measuring the amount of damages required individual inquiry, the court ruled it would not overwhelm the liability and damages issues capable of class-wide resolution (Rilley v. MoneyMutual, LLC, January 11, 2019, Frank, D.).

Defendants operate the website www.moneymutual.com ("MM Website"), which allows consumers to fill out payday loan applications that were then sold to lenders based on lead purchase agreements. The loans ranged from $1,000 to $2,500 and had an APR range of 261 percent to 1304 percent for a 14-day loan. The MM Website advertised loans "as soon as tomorrow" but failed to disclose that MoneyMutual and the lenders to which it sold leads were not licensed in Minnesota or that the loans may be illegal in Minnesota. MoneyMutual sold leads on approximately 28,000 unique Minnesota consumers from 2009 to 2017.

In 2010 and 2012, the Attorney General for the State of Minnesota notified MoneyMutual that it was subject to Minnesota law restricting payday loans and that MoneyMutual was aiding and abetting lenders that violate Minnesota law. Minnesota’s laws limit the interest rates and fees that payday lenders can charge; require disclosures to the consumers about the loan and the borrower’s obligations; restrict the duration of payday loans to no greater than 30 days; and require payday lenders to be licensed by the Minnesota Commissioner of Commerce. MoneyMutual did not respond to the Attorney General’s letters.

Plaintiffs are consumer-borrowers who visited the MM Website from computers in Minnesota, submitted their Minnesota addresses and banking information, and were matched with a lender that provided loans less than $1,000. In their second amended complaint, the consumers brought claims under the Minnesota Consumer Fraud Act, Uniform Deceptive Trade Practices Act, and False Statement in Advertising Act.

The payday lenders objected, claiming the consumers did not adequately represent the interests of the class, they have not demonstrated the material issues are susceptible to proof on a class-wide basis and predominate over individual issues, and a class action is not superior to other methods of adjudicating the controversy. The lenders attacked the credibility and integrity of the named plaintiffs, arguing the consumers’ financial vulnerability would incentivize them to take a quick payday and not adequately represent the interests of absent class members. The court dismissed that argument as purely speculative and underscored that their financial difficulties were typical of the proposed class.

The court was unpersuaded by the lenders’ arguments, noting that the core of their liability is based on actions relating to information provided on the MM Website and their alleged arranging of consumer short-term loans within the meaning of the statute. Even though the determination of how much money class members paid to lenders would require individual inquiry not capable of class-wide resolution, the court observed that the consumers seek other types of damages that are capable of class-wide resolution.

Having determined that the consumers satisfied the requirements for Rule 23 of the Federal Rules of Civil Procedure, the court certified the following class: "All individuals residing in Minnesota who (1) received a loan from a lender of $1,000 or less, (2) that required a minimum payment within 60 days of loan origination of more than 25 percent of the principal balance, (3) by using moneymutual.com or any MoneyMutual-branded website, (4) from August 1, 2009 through the date of this Order."

This case is No. 0:16-cv-04001-DWF-LIB.

Attorneys: E. Michelle Drake (Berger & Montague, PC) and Mark L. Heaney (Heaney Law Firm, LLC) for Scott Rilley. Christina Rieck Loukas (Winthrop & Weinstine, PA) and Donald J. Putterman (Putterman Landry & Yu LLP) for MoneyMutual, LLC, Selling Source, LLC, and PartnerWeekly, LLC.

Companies: MoneyMutual, LLC; Selling Source, LLC; PartnerWeekly, LLC

MainStory: TopStory Loans MinnesotaNews

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