91-year-old veteran faces snowballing payday loan with 682% interest rate. Here's how it is legal

YOUNTVILLE, Calif. (KGO) -- 7 On Your Side is investigating questionable lending practices from a Montana-based company that appears to be preying on elderly victims in need -- including a 91-year-old Bay Area veteran who was charged a 682% interest rate to borrow money. As 7 On Your Side discovered, the problem is tied to a native tribe with a huge lack of oversight.

Ninety-one-year-old Alan Culbert was shivering as he described the phone call he received from a Montana-based lending company called Plain Green Loans.

"So this is the loan. It was for $900," said Culbert. "It was very deceptive to me the way it was presented."

Struggling on a fixed income, the Vietnam veteran needed to buy Christmas presents for his grandchildren and make small fixes on his car.

After applying online, he says Plain Green Loans was one of the only companies to accept his application for a $900 loan. The company advertises an "excellent" 5-star rating with "better rates" and "easy straightforward process."

Yet, unbeknownst to Culbert, it came with a huge catch: a 682% interest rate.

"It doesn't make any sense," said Culbert. "I was shocked and I'm not in a position where I have very much money."

"And during that initial conversation with them, at any point did they tell you they would be charging you interest?" asked 7 On Your Side's Stephanie Sierra.

"I had no idea there was going to be an interest charge," said Culbert.

Ironically, Culbert paid off his $900 loan to the company within roughly two months. But he was left in a financial mess trying to pay off the more than $2,646.69 he was charged in interest.

The interest alone accounted for more than 50% of his monthly income. And he couldn't even afford his principal payment plus interest -- he would have no money left.

"I'm wondering, what do I do now?" said Culbert. "I don't see how that can be legal and they can charge that much in this state."

In California, the state's usury law generally caps interest rates on consumer loans at 10% per year, although there are many exceptions. In this case, the Montana-based company is operated by a native tribe -- the Chippewa Cree Tribe of Rocky Boy's Reservation -- where most argue their "sovereign immunity" allows them to be governed by federal, not state lending laws.

But federally, there is no interest rate cap, aside from a 36% cap on loans to active duty military members and their families.

"You reach out in a moment of desperation and then they lock you in," said Ellen Harnick, the executive vice president of the Center for Responsible Lending. "Plain Green Loans is one of the notorious companies. They flout state interest rate limits. And tout themselves as providing 'access to credit.' But this isn't credit. This is real harm."

Harnick says California should follow Minnesota's lead.

"Minnesota enacted a 36% rate cap that applied to these sorts of loans and made fees in excess of that uncollectable," said Harnick. "Once the AGs go after these abuses, the lenders back down."

7 On Your Side repeatedly reached out to California Attorney General Rob Bonta's office for further comment but have yet to hear back.

"We should be going after these tribal abuses. It's fair to weigh in with the state legislature -- we need to be banning payday loans in California," said Harnick, calling on Bonta to step in.

Only six states have been effective at eliminating most tribal loans, including Connecticut, Arkansas, New York, Pennsylvania, Virginia and West Virginia.

Minnesota's Attorney General Keith Ellison is the latest to confront the problem.

"Sovereign entities, like states or tribal governments, generally you can't sue them under a theory of sovereign immunity. But you can hold them accountable if you name their leaders," said Ellison.

Attorney General Ellison says he filed litigation to successfully stop predatory lending against Bright Lending, Green Trust Cash and Target Cash Now, operated jointly under a single entity called Island Mountain Development Group.

"When we brought the lawsuits against three separate entities, we named the tribal entities' officer and said, 'You got to stop doing this.' And as a result we were able to stop that lending," said Ellison.

The groups were charging between 400% to 600% annual interest rates. He says the outstanding balances on loans from those groups exceed $1 million.

"We'd be more than happy to share what we do with California," said Ellison.

Ellison added that tribal lenders also use their sovereign status to, not only get around triple digit interest rates, but to also avoid paying damages -- leaving vulnerable victims like Culbert stuck with recurring charges.

"At any point did you try and tell them about your situation? Did you tell them you're a veteran?" asked 7 On Your Side's Stephanie Sierra.

"I absolutely did," said Culbert.

"And they said what?" asked Sierra.

"'Sorry, too bad. You signed a loan agreement, and you owe all this money,'" said Culbert. "It will ruin your credit history, and we will proceed with collections."

Attorney General Ellison says some of the counterarguments from tribal lenders include: the loan amounts are "low," the groups are afraid of defaults prompting higher rates, and they argue the rates help support their native tribes' impoverished communities.

7 On Your Side is working with Alan Culbert to resolve his situation, but the Chippewa Cree Tribe has yet to respond to any of our questions.

To protect yourself, we've posted a list of tribal lending companies currently being investigated or litigated across the country.

• Bright Lending, Green Trust Cash, & Target Cash Now (under Island Mountain Development Group) (by Minnesota Attorney General)


• Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., Majestic Lake Financial, Inc. (by CFPB)


• Plain Green Loans, Great Plains Lending, & MobiLoans (Under Think Finance, LLC) (by CFPB)


• Loan at Last, Sky Trail Cash, Nine Torches, Bright Star Cash, Lendgreen (class action)


• SpotLoan (class action)


• Big Picture Loans, Castle Payday (class action)


• MaxLend (class action)


• American Web Loan (class action)


• Cash Advance Now (by State of Washington)


• Greenarrow Loans (class action)


• Uprova (class action)


• CreditCube (class action)


• Coho Financial (class action)

This is an incomplete and partial list. Consumers are encouraged to do their own research before making personal financial decisions. To see if a Consumer Loan provider is licensed in the State of California, visit the DFPI search portal.

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