Corporate Misconduct Accountability Project
CreditNinja Lending, LLC · Class Action
CreditNinja Charged Indiana Borrowers 225% Interest on $800 Loans
A class action alleges CreditNinja used a rent-a-bank scheme to evade Indiana’s 36% interest rate cap, trapping borrowers in debt with rates exceeding 224% APR.
CRITICAL SEVERITY
TL;DR
Janet Trawick borrowed $800 from CreditNinja and was charged 224.99% interest, more than six times Indiana’s legal limit. The lawsuit alleges CreditNinja partnered with a Utah bank to nominally originate loans, then immediately took them back to collect usurious interest from Indiana residents. CreditNinja controlled every aspect of the lending process while the bank took a guaranteed 5% fee with zero risk. Borrowers paid massive excess charges that Indiana law prohibits.
If you took out a high-interest loan from CreditNinja while living in Indiana, you may be entitled to compensation.
224.99%
Interest rate charged to Indiana borrower
36%
Indiana’s maximum legal interest rate
$800
Loan amount received by plaintiff
5%
Fee paid to partner bank per loan
95-100%
Economic interest retained by CreditNinja
The Allegations: A Breakdown
Core Allegations
What they did · 8 points
| 01 | CreditNinja charged Janet Trawick 224.99% interest on an $800 loan, more than six times Indiana’s 36% maximum rate. The loan was obtained entirely over the internet through CreditNinja’s website and platform. | high |
| 02 | CreditNinja partnered with Capital Community Bank in Utah, a state with no interest rate caps, to nominally originate loans. The bank’s name appeared on loan documents to create a legal illusion that the bank was the true lender. | high |
| 03 | CreditNinja advertised for borrowers, directed loan marketing, controlled underwriting decisions, and conducted all servicing and collection activities. The Utah bank had virtually nothing to do with any aspect of the lending process. | high |
| 04 | Capital Community Bank received a guaranteed fee of approximately 5% per loan regardless of whether borrowers repaid. CreditNinja immediately acquired the loans and retained 95% to 100% of the economic interest, assuming all credit risk. | high |
| 05 | CreditNinja indemnified Capital Community Bank against any losses. At no point was the bank’s capital at risk, yet it claimed to be the lender to evade Indiana’s consumer protection laws. | high |
| 06 | The loan agreements included arbitration clauses requiring Utah law to apply. These provisions were designed to block Indiana borrowers from enforcing their state’s usury protections. | high |
| 07 | CreditNinja makes loans in its own name in states that do not cap interest rates. Only in states like Indiana with usury limits does CreditNinja use the rent-a-bank structure to evade local laws. | high |
| 08 | The plaintiff disclosed her Indiana address on the loan application. CreditNinja knew it was lending to Indiana residents and deliberately structured transactions to circumvent Indiana law. | high |
Profit Over People
The business model · 6 points
| 01 | CreditNinja operates as a FinTech business making loans at rates illegal in most states. It systematically targets borrowers in states with consumer protections by routing loans through Utah banks. | high |
| 02 | The company owns and operates www.CreditNinja.com, which carries a copyright notice stating the content belongs to CreditNinja Lending, LLC. Capital Community Bank’s own website makes no mention of these high-interest loans. | medium |
| 03 | All rates charged by CreditNinja to Indiana residents exceed 36% per year. The 224.99% rate charged to the plaintiff is typical of rates CreditNinja imposes on Indiana borrowers. | high |
| 04 | CreditNinja has the predominant economic interest in every loan. It markets, brokers, arranges, and facilitates loans while obtaining the right to 95% to 100% of loan proceeds and interest payments. | high |
| 05 | In a complex series of transactions, CreditNinja causes money loaned by Capital Community Bank to be immediately repaid, then acquires servicing rights to collect usurious interest directly from consumers. | medium |
| 06 | The rent-a-bank arrangement allows CreditNinja to collect interest rates that would subject it to penalties, fines, and business model changes if courts determined it was the true lender. | high |
Regulatory Evasion
How they dodged the law · 7 points
| 01 | Indiana law caps consumer loan interest at 36% per year for unsupervised loans and establishes tiered maximum rates for supervised loans, none exceeding 36% on the first $2,000 borrowed. | medium |
| 02 | Indiana law voids agreements that purport to apply another state’s law to loans made to Indiana residents. It also voids agreements consenting to jurisdiction in another state or fixing venue outside Indiana. | medium |
| 03 | Indiana defines a loan as made in the state if a writing signed by the debtor is received by the lender in Indiana, or if the lender advertised or solicited loans to Indiana residents by any means including the internet. | medium |
| 04 | Indiana law prohibits consumers from waiving rights under the Consumer Credit Code. Settlement agreements that waive consumer rights are invalid if found unconscionable. | medium |
| 05 | If a lender violates provisions regarding authority to make consumer loans, Indiana law declares the loan void and the borrower is not obligated to pay either principal or finance charges. | high |
| 06 | Capital Community Bank uses its status as a state-chartered bank to claim federal preemption over Indiana anti-usury statutes and to export Utah’s lack of interest caps to borrowers in states with stricter laws. | high |
| 07 | CreditNinja’s arbitration and choice-of-law provisions constitute an impermissible prospective waiver of statutory rights under the Indiana Consumer Credit Code and are invalid under state law. | medium |
Economic Fallout
The cost to borrowers · 6 points
| 01 | The plaintiff has paid usurious interest on the $800 loan. The loan remains outstanding as of the filing date, meaning collection efforts and interest continue to accrue. | high |
| 02 | Indiana law entitles borrowers to a refund of any excess charge. Borrowers who paid amounts exceeding lawful obligations can recover excess amounts from the person who made the charge or any assignee collecting payments. | medium |
| 03 | If a lender refuses to refund excess charges within a reasonable time after demand, Indiana law allows recovery of a penalty up to the greater of the finance charge amount or ten times the excess charge. | medium |
| 04 | Indiana law permits penalty recovery even if the creditor refunds the excess charge, provided the creditor made the excess charge in deliberate violation of or reckless disregard for the Consumer Credit Code. | medium |
| 05 | The loan was obtained for personal, family, or household purposes, not for business. Funds were transferred to the plaintiff’s Indiana bank account via ACH and repayments were collected via ACH from her account. | low |
| 06 | A significant majority of the transaction occurred within Indiana, including applying for the loan, receiving funds, and making payments. Only the nominal origination by the Utah bank occurred outside the state. | medium |
Corporate Accountability Failures
Who knew what · 6 points
| 01 | The managers of CreditNinja Lending, LLC are Mark A. Friedgan, Kenneth C. Shultz, and David S. Shorr. All are believed to be citizens of Illinois, where the company maintains its principal office. | low |
| 02 | CreditNinja Lending, LLC was formerly known as KMD Partners, LLC. The company is organized under Delaware law but operates from 222 S. Riverside Plaza, Suite 2200, Chicago, Illinois. | low |
| 03 | According to a referenced 10-K filing, the parent company acknowledges numerous litigation and enforcement actions challenging whether issuing bank partners are the true lenders of loans in question. | high |
| 04 | The 10-K states that if courts deem the company rather than the bank to be the true lender, it could impact loan enforceability, subject the company to regulatory investigations and penalties, and force changes to business practices. | high |
| 05 | Despite awareness of legal risks and numerous challenges to rent-a-bank models nationwide, CreditNinja continued structuring loans through Utah banks to evade state interest rate caps. | high |
| 06 | The excessive interest charges imposed by CreditNinja were willful. The company undertook what it knew to be a course of conduct presenting substantial risk of illegality. | high |
Community Impact
Who was harmed · 5 points
| 01 | The proposed class includes all individuals with Indiana addresses for whom CreditNinja arranged loans at more than 36% interest within two years before the lawsuit filing. The class likely exceeds 100 members. | medium |
| 02 | The loan was made entirely via the internet using a standard form agreement. CreditNinja applied the same predatory terms to all similarly situated Indiana borrowers. | medium |
| 03 | The plaintiff is a citizen and resident of Indianapolis, Indiana. She obtained the loan on or about June 3, 2024, for personal purposes through www.CreditNinja.com. | low |
| 04 | Individual actions are not economically feasible for borrowers harmed by excess interest charges. Many class members are likely unaware of their legal rights under Indiana law. | medium |
| 05 | Rent-a-bank schemes allow predatory lenders to make loans to consumers in states that prohibit usury with a thin veneer of legal cover, systematically targeting vulnerable borrowers. | high |
The Bottom Line
What this means · 6 points
| 01 | CreditNinja is alleged to be the true lender because it has the predominant economic interest in loans made to consumers. Multiple courts nationwide have applied this test to similar rent-a-bank arrangements. | high |
| 02 | The lawsuit cites over a dozen court decisions finding that nonbank entities with predominant economic interests are true lenders subject to state usury laws, not the nominal bank partners. | medium |
| 03 | Capital Community Bank can only be reached through CreditNinja Lending, LLC for these high-interest loans. The loans are not available directly from the bank and do not appear on its consumer loan webpage. | medium |
| 04 | The class action seeks statutory damages, attorney’s fees, expenses and costs. Indiana law permits courts to award reasonable attorney’s fees when creditors are found to have violated the Consumer Credit Code. | medium |
| 05 | The amount in controversy exceeds $5 million on a classwide basis. Federal jurisdiction exists under the Class Action Fairness Act with diverse citizenship between the Indiana plaintiff and the Illinois and Delaware defendant. | low |
| 06 | Actions for statutory damages and invalidation of loans for usury have been recognized by English and American courts since before 1787, satisfying Article III standing requirements. | low |
Timeline of Events
June 2024
Plaintiff Janet Trawick obtains $800 loan from CreditNinja at 224.99% interest
June-September 2024
Plaintiff makes some payments including usurious interest; loan remains outstanding
September 27, 2024
Class action complaint filed in U.S. District Court for Northern District of Illinois
Direct Quotes from the Legal Record
QUOTE 1
Admission of Legal Risk
accountability
“There have also been numerous litigation and enforcement actions that challenge the status of the issuing bank partner as the ‘true lender’ of the loan in question… If we were deemed by a court to be the ‘true lender’ of any loans originated by the issuing bank partner, it could impact the enforceability of the loans; it could subject us to regulatory investigations, penalties and fines; we might have to alter the terms of the loans we broker; it could create challenges for our capital markets and securitization models; we would have to change the way we do business in such jurisdictions; and we may suffer an adverse impact on our business.”
💡 CreditNinja’s parent company acknowledged in SEC filings that its business model faces widespread legal challenges and could be found illegal
QUOTE 2
Excessive Interest Rate
allegations
“The loan had a disclosed interest rate of 224.99%.”
💡 This rate is more than six times Indiana’s 36% legal maximum for consumer loans
QUOTE 3
Pattern and Practice
allegations
“This rate is typical of the rates charged by CreditNinja Lending, LLC to residents of Indiana… All rates charged by CreditNinja Lending, LLC to residents of Indiana exceed 36% per annum.”
💡 The illegal rate charged to the plaintiff represents systematic conduct affecting all Indiana borrowers
QUOTE 4
No Bank Risk
profit
“At no point is Capital Community Bank’s capital at risk. CreditNinja Lending, LLC acquires the loan immediately after it is made and pays Capital Community Bank about 5% of the value of the loan, regardless of whether the consumer repays the loan.”
💡 The bank receives a guaranteed fee with zero risk, undermining any claim it is the true lender
QUOTE 5
Indemnification
allegations
“CreditNinja Lending, LLC indemnifies Capital Community Bank against any losses.”
💡 CreditNinja assumes all financial risk while the bank provides only its name and regulatory status
QUOTE 6
Total Control
allegations
“CreditNinja Lending, LLC: Advertises for and obtains borrowers; Directs the marketing for the loans; Directs the underwriting of the loans; Conducts the servicing and collection of the loans.”
💡 CreditNinja controls every aspect of the lending process while the bank is entirely passive
QUOTE 7
Predominant Economic Interest
profit
“CreditNinja Lending, LLC thus has the predominant economic interest in the loans… CreditNinja Lending, LLC thus obtains the predominant economic interest in the loan, i.e., 95% to 100%.”
💡 Courts nationwide use the predominant economic interest test to determine the true lender
QUOTE 8
Deliberate Evasion
regulatory
“In states, such as Indiana, which define the rates charged by CreditNinja Lending, LLC as usurious, CreditNinja Lending, LLC ‘partners’ with a bank… Such ‘rent-a-bank’ schemes simply allow predatory lenders like CreditNinja to make loans to consumers in states which prohibit usury, including Indiana, with a modicum of legal cover.”
💡 CreditNinja uses the bank partnership only in states with consumer protections, revealing deliberate intent to evade the law
QUOTE 9
Indiana Law on True Lender
regulatory
“A loan or modification of a loan agreement is made in this state if a writing signed by the debtor and evidencing the debt is received by the lender or a person acting on behalf of the lender in this state.”
💡 Under Indiana law, loans to Indiana residents are subject to Indiana’s interest rate caps
QUOTE 10
Invalid Choice of Law Provisions
regulatory
“Except as provided in subsection (5), the following agreements by a buyer, lessee, or debtor are invalid with respect to consumer credit sales, consumer leases, consumer loans, or modifications thereof, to which this article applies: (a) An agreement that the law of another state shall apply.”
💡 Indiana law voids CreditNinja’s attempt to force borrowers to accept Utah law
QUOTE 11
Loan Voidance Remedy
regulatory
“If a creditor or a person acting on behalf of the creditor has violated the provisions of this article that apply to the authority to make consumer loans (IC 24-4.5-3-502), the loan is void and the debtor is not obligated to pay either the principal or loan finance charge.”
💡 Indiana law provides that unlicensed or illegal loans are completely void, canceling all borrower obligations
QUOTE 12
Penalty for Willful Violations
economic
“If a debtor is entitled to a refund and a person liable to the debtor refuses to make a refund within a reasonable time after demand, the debtor may recover from that person a penalty in an amount determined by a court not exceeding the greater of either the amount of the credit service or loan finance charge or ten (10) times the amount of the excess charge. If the creditor has made an excess charge in deliberate violation of or in reckless disregard for this Article, the penalty may be recovered even though the creditor has refunded the excess charge.”
💡 Indiana law authorizes penalties up to ten times excess charges for willful violations, deterring predatory lending
QUOTE 13
Willful Misconduct
accountability
“The excessive interest charges imposed by Defendant were willful… Defendant thus undertook what it knew to be a course of conduct that presented substantial risk of illegality.”
💡 The lawsuit alleges CreditNinja knowingly violated the law, supporting claims for enhanced penalties
QUOTE 14
Website Ownership
profit
“The website content is ‘(c) 2024 CreditNinja Lending, LLC. All Rights Reserved.'”
💡 CreditNinja owns and controls the consumer-facing website, not the nominal bank partner
QUOTE 15
No Bank Presence
conclusion
“Capital Community Bank has a website that offers its customers personal loans, https://ccbank.com/personal-loans, but it does not mention the high-interest loans at issue here. These can only be obtained through CreditNinja Lending, LLC, and not through Capital Community Bank directly.”
💡 The high-interest loans are CreditNinja products unavailable through the bank, further proving CreditNinja is the true lender
Frequently Asked Questions
What is a rent-a-bank scheme?
A rent-a-bank scheme is when a non-bank lender partners with a bank in a state with weak consumer protections. The bank nominally originates loans but immediately sells them back to the non-bank lender. The lender does all the work and takes all the profit while using the bank’s name to evade state interest rate caps.
How much interest did CreditNinja charge Indiana borrowers?
CreditNinja charged the plaintiff 224.99% annual interest, more than six times Indiana’s legal maximum of 36% per year. The lawsuit alleges this excessive rate is typical for all CreditNinja loans to Indiana residents.
What role did Capital Community Bank play?
Capital Community Bank is a Utah bank that nominally originated the loans. The lawsuit alleges the bank had virtually nothing to do with marketing, underwriting, servicing, or collecting the loans. It received a guaranteed 5% fee per loan with zero risk while CreditNinja controlled everything and kept 95-100% of the economic interest.
Is CreditNinja licensed to lend in Indiana?
The lawsuit alleges CreditNinja violated Indiana lending laws by arranging loans at illegal interest rates. Indiana law requires lenders to Indiana residents to comply with the state’s 36% interest rate cap regardless of where the lender is located.
What remedies are available under Indiana law?
Indiana law entitles borrowers to a refund of all excess interest charges. If the lender refuses to refund excess charges, borrowers can recover a penalty up to ten times the excess charge or the total finance charge, whichever is greater. For willful violations, loans may be declared completely void with no obligation to repay principal or interest.
Can CreditNinja force borrowers to use arbitration in Utah?
No. Indiana law prohibits agreements that require consumers to apply another state’s law or submit to jurisdiction in another state. The lawsuit alleges such provisions are invalid prospective waivers of statutory rights under the Indiana Consumer Credit Code.
Who can join the class action?
The proposed class includes all individuals with Indiana addresses for whom CreditNinja arranged loans at more than 36% interest within two years before the lawsuit was filed on September 27, 2024.
Why did CreditNinja use a Utah bank?
Utah has no interest rate caps on consumer loans. By using a Utah bank as a nominal lender, CreditNinja attempted to export Utah’s lack of consumer protections to borrowers in Indiana and other states with usury laws.
Did CreditNinja know this was legally risky?
Yes. The lawsuit cites the parent company’s SEC filings acknowledging numerous litigation and enforcement actions challenging whether bank partners are true lenders. The filings warn that being found the true lender could subject the company to penalties and force business model changes.
What can I do if CreditNinja charged me illegal interest?
If you are an Indiana resident who obtained a loan through CreditNinja at an interest rate exceeding 36%, you may be part of this class action. You can contact the attorneys listed in the complaint or consult with a consumer rights attorney to understand your options for recovering excess charges and penalties.
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