Law students win preliminary settlement approval in payday lender suit

Internet payday lender Tremont Financial LLC would pay $60,000 and refrain from making loans to any Wisconsin consumers under a preliminary settlement in a class-action case brought by University of Wisconsin–Madison Law School students and the school’s Consumer Law Litigation Clinic.

“We are pleased that we were able to reach this agreement. It’s a good result for members of the class and for Wisconsin consumers,” says Sarah Orr, director of the clinic. “Beyond that, it provided meaningful, hands-on litigation work for the students involved.”

The suit alleges that Tremont Financial’s loan contracts violated certain provisions of Wisconsin’s Consumer Act and other common law provisions. Tremont Financial denied the allegations and has not admitted liability.

Dane County Circuit Court Judge Sarah O’Brien gave preliminary approval to the settlement in late July. The settlement involves loans that up to 137 state residents received from Tremont Financial between Nov. 1, 2004, and Dec. 20, 2007. The court has not ruled on the merits of the case and its preliminary approval does not indicate the court’s opinion regarding the case or its final outcome.

As part of the proposed settlement, Tremont Financial would release all class members from the obligation to pay outstanding loans and contact credit-reporting agencies to seek the deletion of any adverse information it may have reported about any class member. In return, all claims against Tremont Financial would be dropped.

Established in 1991, the Consumer Law Litigation Clinic trains students in civil litigation, provides client service and advocates in the public interest. The clinic has provided legal services to lower income clients while providing law students the opportunity for real-world training.

The clinic handles individual and class action lawsuits in state and federal courts covering a variety of consumer protection issues, including misrepresentation and fraud, credit scams, predatory lending, bad faith denial of insurance claims, anti-trust violations, unfair debt collection practices and “fringe banking” abuses by rent-to-own and payday loan companies.