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The Rise of Tribes and the Fall of Federal Indian Law
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Blog: Internet lenders can longer hide behind tribal immunity

Filed Under: Business | Law | National
More on: cheyenne river sioux, ftc, immunity, payday loans
     

The Federal Trade Commission says Internet lenders in Indian Country must comply with federal consumer protection laws:
For years, a handful of sketchy payday lenders have been using purported affiliations with tribal lands to try to skirt federal and state laws. But courts and regulators have recently been cracking down on these operations, saying that a tribal connection does not shield a business from prosecution. One operation facing charges from the Federal Trade Commission has now agreed to pay nearly $1 million in penalties over charges that it illegally garnished borrowers’ wages and wrongfully sued them in tribal courts.

Back in 2011, the FTC sued Martin Webb, operator of various online payday lending operations, including Great Sky Financial and Western Sky, whose TV ads are likely familiar to regular viewers of cruddy daytime and late-night TV shows, for allegedly attempting to garnish borrowers’ wages without first obtaining a court order, in violation of the FTC Act.

These same companies were subsequently accused of suing borrowers in a South Dakota tribal court that had no jurisdiction over these loans. The tribal court has no jurisdiction over people who are not members of the tribe and who do not reside either on the reservation or elsewhere in South Dakota.

“Regardless of tribal affiliation, debt collectors must comply with federal law,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.

Get the Story:
Chris Morran: Payday Lenders Can’t Use Tribal Affiliation To Garnish Wages Without Court Order (The Consumerist 4/11)

Related Stories:
Indian-owned online lender enters settlement with Connecticut (4/10)


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