When Dwight Graham found himself in a financial pinch back in 2012, he hoped a quick loan for a few hundred dollars would fill the gap. The 60-year-old Navy veteran from Groton applied for a payday-type loan online from a company called Cash Call.
"They said they were small interest rates, and I said that's fine,” said Graham. “Until I got onto a computer, my friend looked it up, and told me you're paying well over 100 percent interest."
The loan was set up to take payments directly from Graham’s bank account. When he looked at his statements, Graham realized he was paying far more than he ever expected.
The Connecticut Department of Banking has been investigating these types of loan companies, which charge sky-high interest rates well over the legal limit of 12 percent.
Earlier this year, it reached a settlement with two such companies, the largest of them being Cash Call.
"I have never seen anything as unconscionable as charging a customer 89-355 percent," said Howard Pitkin, commissioner of the state Department of Banking with 40 years of expertise in banking regulation. "It's illegal in Connecticut, and it's illegal in other states."
The settlement established a restitution fund of $4.5 million. That money was set aside to repay 3,800 borrowers in Connecticut the excess interest they were charged.
But instead of sending those borrowers mail they might ignore, a staff of 11 people reached out to the customers directly through phone calls and emails to make sure they got their money back.
Those efforts meant 84 percent of the fund was paid out instead of returning to the company.
"Usually the average is between 10-20 percent, and then the money goes back to the company and the whole matter is forgotten,” said Pitkin. “They got their fingers burned badly in Connecticut."
But for all the companies the DOB could force to pay up, there are others that it can't touch because they are owned by Native American tribes.
“They say you can't touch us because we're on an Indian reservation,” said Pitkin. “Tribal sovereignty."
It's a lesson Dwight Graham learned the hard way after taking out three other loans from companies that the DOB can't go after.
They include One Click Cash, which is owned by the Santee Sioux Nation of Nebraska; United Cash Loan, owned by the Miami Tribe of Oklahoma; and MobiLoans, which is owned by the Tunica-Biloxi Tribe of Louisiana.
All claim sovereign immunity, meaning Connecticut's banking laws don't apply.
After several calls to these loan companies, the Troubleshooters discovered many are represented by teams of lawyers and public relations firms.
"We have one letter from a pretty high classed law firm which goes through two pages of 'you can't touch us',” said Pitkin, “and in the last paragraph it says, ‘But, you know, customer service is really important to us.’"
Dwight Graham wants others to learn from his mistake.
"Do not use those loans," said Graham.
The DOB wants consumers to know that if they get a loan from a company owned by a Native American tribe, the state can't help.
"I would advise the public not to do business with those companies because there's no one to protect you," said Pitkin.
The Troubleshooters reached out to all of the companies involved. So far, we have not heard back from them.
The DOB still wants to hear from anyone who's paying high interest rates on these kinds of loans, but when it comes to the companies owned by Native American tribes, Pitkin says there's little they can do and it's up to the federal government to get involved.