July 18, 2011

Payday Lending A Tribal/State Battle?

The squabbling over the connection between payday lenders and tribes has taken an interesting turn as it has now been framed as a tribal sovereignty/states’ rights battle by a pair of opposing statements released by a Native group and a payday trade organization. The Native group has come out for the controversial tribal/lender connection while the trade group has said Internet-only alliances with tribes don’t conform to its best practices code.

The Native American Fair Commerce Coalition (NAFCC) says the tribal/payday lender affiliations, derided by some as “rent-a-tribe” arrangements to get around state rules, are strictly a matter of tribal sovereignty.

The Coalition stated on July 11  that  “Native American tribes are free to engage in commerce unhindered by bias or discrimination. We believe that those seeking to deny Native Americans their business development and entrepreneurial rights are on the wrong side of this issue, and on the wrong side of history.”

The group also said “the NAFCC is therefore committed to the protection of Native American sovereign immunity and views any campaign to single out Native American-owned businesses that operate under the laws of the United States to be nothing short of discriminatory.”

The Washington, DC-based group, founded in 2010 according to its Facebook page, is made up of many Oklahoma tribes “committed to protecting the sovereign rights—well settled in U.S. law—of Native Americans to pursue business opportunities that provide economic opportunity for Native Americans nationwide.”

In the opposing corner is the Community Financial Services Association of America (CFSAA), based in Alexandria, Virginia. The payday lender trade group, founded in 1999, said on July 7 the tribal/payday lender affiliations “are solely a practice of some Internet-based lenders who choose not to license themselves in the states in which they operate, but rather rely on the law of the sovereign nation.”

CFSAA said its “best practices require that all our member companies that offer payday advances through the Internet must be licensed in the state in which the customer resides and that they comply with all applicable state laws.” This “ensures strong consumer protections wile preserving access to short-term credit.”

A study done earlier this year by the Washington, DC-based Center for Public Integrity alleged that Internet-only lender/tribal arrangements were “rent-a-tribe” arrangements to get around state rules and potential lawsuits, an update from earlier “rent-a-bank” arrangements in states that had fewer restrictions on this kind of lending.

Read more @ Indian Country Today Media Network.comSummer Reading for Perspective on Current American Indian Policy Debates - Indian Country Today Media Network.com.

April 9, 2012

FTC Seeks to Shut Down Two Oklahoma Tribes’ Online Payday Lending Services

The Federal Trade Commission (FTC) is seeking to shut down online payday lending operations owned by the Miami Tribe of Oklahoma and the Modoc Tribe of Oklahoma, reported NewsOK.com.

Complaints against the lending firms to the Better Business Bureau (BBB) generally allege high interest rates from 600 to 1,800 percent, reported Newson6.com.

“The fact the tribe supposedly owns the company is not the problem. It’s the business practices,” Rick Brinkley of the BBB told Newson6.com.

Miami Nations Enterprises (MNE) operates the high-fee, short-term lending operations AMG Services and Tribal Financial Services, and the Modoc Tribe owns Red Cedar Services, reported the Tulsa World.

The payday-loan business has created numerous jobs on the Modoc Reservation in Miami, Oklahoma, Bill Follis, the chief of the Modoc tribe since 1974, told The Wall Street Journal in an article published on February 10, 2011. “We don’t want to brag,” Follis, a former loan officer at a bank, said last year. “But it’s good.”

The April 2 lawsuit in U.S. District Court in Nevada is the second in seven months filed by the FTC against a payday lender that has used sovereign immunity as a defense against legal action by state authorities. The most recent lawsuit alleges the payday lending services misrepresented and inflated fees, and violated legal lending practices stipulated by the Federal Trade Commission Act. The lawsuit is against a “web of defendants, including AMG Services, Inc., three other Internet-based lending companies, seven related companies, and six individuals,” an FTC press release states.

“According to the FTC, the defendants also violated the Truth in Lending Act by failing to accurately disclose the annual percentage rate and other loan terms; and violated the Electronic Fund Transfer Act by illegally requiring consumers to preauthorize electronic fund transfers from their accounts,” the release states.

In previous cases against tribal payday loan operations, the judge has sided with the Indian Nations. On February 13, the District Court from the Colorado Supreme Court ruled in favor of the Miami Tribe of Oklahoma and the Santee Sioux Nation, which operates SFS Inc., that they are exempt from government oversight. “The Miami and Santee people are the ones we must trust, as long as Congress lets us trust them, to know what kinds of business relationships are in their best interests,” District Court Judge Morris B. Hoffman said, reported Indian Country Today Media Network in the February 15 article Tribes’ Payday Loan Operations Upheld. “They do not need the guidance of the State of Colorado, through either its law enforcement officials or its courts.”

Barry Brandon, executive director of the Native American Fair Commerce Coalition, supported the Colorado decision, reported NewsOK.com. “The court got it right,” he said in March. The tribes are not Coalition members.

The FTC has requested the court order an immediate injunction on payday loans while the agency pursues its case against the defendants.

Read more @ Indian Country Today Media Network.comSherman Alexie’s Absolutely True Diary Makes ALA’s Most-Challenged List Again - ICTMN.com.

Blog powered by Wordpress