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A settlement between the state of Colorado and Kansas-based debt collector TrueAccord will refund $500,000 to borrowers who defaulted on loans issued by tribal lending entities. 

According to the settlement, investigators found that, from 2017 to 2022, TrueAccord collected or attempted to collect on roughly 29,000 consumers who defaulted on loans issued by the tribal lenders. Most loans had interest rates over 500% APR, and some approached 900% APR—far greater than the 12% cap for unlicensed loans under Colorado law, according to a statement from the state’s attorney general. 

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Tribal lenders typically operate online and advertise to consumers that their loans are subject to tribal law, rather than Colorado law. 

TrueAccord violated state law by telling consumers they owed the full loan balance when they collected or attempted to collect on the debt. For loans made by unlicensed lenders, state law says consumers have no obligation to pay finance charges greater than 12% and it entitles them to refunds if they do pay.

When TrueAccord, a non-tribal entity, attempted to collect the debts using tribal law rather than state law, they fell afoul of state investigators, who began examining TrueAccord’s records in September 2022. Colorado eventually charged the company with violating the Colorado Fair Debt Collections Act

Attorney General Phil Weiser announced in a press release Tuesday that the state had reached a settlement with TrueAccord, which would pay Colorado $500,000 to be used for customer refunds. 

“Colorado consumers are protected from high interest rates on unlicensed loans regardless of where those loans originate,” Weiser said in a statement. “My office will hold accountable any companies that violate the law by trying to collect on illegal, high-interest debt. In this action, we are doing just that, and getting money back to consumers in the process.”

TrueAccord is further barred from collecting on any debt where the original loan’s interest rate exceeded state limits, Weiser said.

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