Tribal lenders were outraged by New York’s order to stop making loans there, saying it violates their constitutionally protected right to set and enforce their own regulations.

“Years of precedent set by the federal government are being thrown out the window by overzealous regulators looking to further oppress tribal nations and breach our sovereign rights,” said Barry Brandon, executive director of the Native American Financial Services Association, a trade group, in a statement. Brandon said the lending companies are wholly owned by the tribes and provide needed income for community development.

Yet some lenders that claim sanctuary on Native American land operate for the profit of outside businessmen who run them through a labyrinth of shell companies, according to an earlier investigation by the Center for Public Integrity. The center found in 2011 that millionaire Scott Tucker operated and profited from payday businesses that were owned on paper by small Indian tribes — a practice known as “rent-a-tribe.” Tucker’s businesses are not affiliated with the NAFSA, the trade group representing tribal lenders.

The Federal Trade Commission sued a group of companies associated with Tucker in 2012 for misleading and charging undisclosed fees. The government won a major victory last month when a federal magistrate ruled that for-profit companies are not necessarily immune from federal consumer protection laws merely because they are affiliated with Indian tribes. The ruling by a magistrate must still be approved by a district court.

If that happens, the ruling “will have broad implications for all federal enforcers seeking to combat illegal payday lending practices,” said Jessica Rich, director of the FTC’s consumer protection bureau.