State settles with firm that tried to collect debt on Colorado Native American loans with 500% interest

A Kansas-based company has agreed to pay half a millions dollars that will be refunded to Native Americans in Colorado for what the state described as illegal debt collection practices.

TrueAccord reached a settlement with the Colorado Attorney General's Office in January, according to a press release from the AG's office. 

Investigators from the state agency learned the TrueAccord contacted 29,000 consumers between 2017 and 2022. Those consumers had defaulted on loans issued by tribal lending entities. Those lend entities, according to the state AG's office, claim their loans are subject to tribal law rather than Colorado law. Most of the loans had interest rates over 500% annual percentage rate (APR), the state claimed. Some loans even approached 900% APR.

Colorado state law caps the interest rate for the remaining balance of a consumer loan at 12 percent per year.    

During the state's investigation (and prior to the settlement), TrueAccord was cited for violating state law - the Colorado Fair Debt Collections Act, in particular - by collecting or attempting to collect the due amounts under the same terms as the tribal entities, according to Colorado Attorney General Phil Weiser.

"Colorado consumers are protected from high interest rates on unlicensed loans regardless of where those loans originate," Weiser stated in the press release. "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."  

In addition to the $500,000 penalty for refunds, TrueAccord was barred from collecting on any debt where the original loan's APR exceeded state limits. The company will provide the state with a list of affected consumers within 30 days of the settlement, the AG's office reported. 

The money from TrueAccord can also be used for consumer and creditor education and future enforcement, per the press release.

TrueAccord provided a statement on the matter: 

In December, TrueAccord entered into an assurance of discontinuance with the Attorney General of the State of Colorado regarding lenders affiliated with federally-recognized Native American tribes following a standard collection agency audit. As a result, TrueAccord paid a settlement that will be used by Colorado to compensate consumers who made a payment on those debts. TrueAccord did not admit that any of our practices violated the Colorado statutes. Instead, TrueAccord entered into this agreement and continues to focus on our mission to create better experiences for consumers in debt.

In addition, a company spokesperson stated:

• TrueAccord collected on behalf of lenders owned by federally-recognized Native American tribes. Colorado alleges that these Tribal Lenders are subject to Colorado interest rate caps, while TrueAccord believes Native American tribes are sovereign and not subject to state laws.
• TrueAccord denies that any of our practices violated the Colorado statutes as part of the agreement TrueAccord paid a settlement to resolve the matter. The Assurance of Discontinuance makes clear that TrueAccord denies that any of our practices violated any Colorado law.
• Colorado will use the settlement to pay any consumers who made a payment on their loans that they received from a Tribal Lender. The race and national origin of the borrowers is not known (i.e. we do not know if the debtors are Native American). 

The Better Business Bureau has TrueAccord currently based in Lenexa, Kansas. However, a 2017 Forbes article about TrueAccord's increasing performance and outside investment reported the company was started in 2013 by a pair of brothers and was based in San Francisco at that time. 

The Colorado Commission of Indian Affairs reported the state's population of Native Americans to be more than 74,000 following the 2020 Census. Many lived at that time in urban areas on the Front Range.

The Ute Mountain and Southern Ute tribes are the only two Native American reservations in Colorado.