Think Finance Inc. will cancel outstanding loans as part of a nationwide settlement of accusations it preyed on consumers, and hand over $40 million to fund efforts to return money to victims of an alleged payday lending scheme, WSJ Pro Bankruptcy reported. Months in the works, the settlement with consumer advocates was hatched in a chapter 11 proceeding that began in 2017 when Think Finance filed for bankruptcy protection in Dallas. Consumer watchdogs including Pennsylvania Attorney General Josh Shapiro, had accused Think Finance of peddling online loans with illegally high interest rates. The state sued in 2014, accusing Think Finance of hiding illegal loans by claiming the lending was being done by Native American tribes. Similar lawsuits were filed in multiple states and obtained class-action status in the company’s bankruptcy. Think Finance denied the accusations, saying that it was merely a financial technology provider, not a lender. So-called “rent-a-tribe” schemes alleged in other lawsuits nationwide leverage the special sovereignty of tribes to evade state-law restrictions on interest rates on short-term loans offered to consumers. The Pennsylvania attorney general contended the tribes were fronts for otherwise illegal lending, skimming a small percentage of the profits in exchange for the use of their names.
