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Group claims Supreme Court ruling affects tribal payday lenders

Friday, May 30, 2014

The National Consumer Law Center claims the U.S. Supreme Court decision in Michigan v. Bay Mills Indian Community affects the tribal payday lending industry.

By a 5-4 vote, the court refused to overturn its precedents regarding tribal sovereign immunity in a commercial setting. The center, however, claims the ruling opens the door for states to take action against tribal entities for conduct that allegedly violates state law.

"The game is up for payday lenders who attempt to cloak illegal conduct in tribal immunity,” Lauren Saunders, the center's associate director, said in a press release.

The center cited language in the majority opinion that said states possess "many other powers" over tribal activities that occur beyond reservation borders. A state, for example, could file suit against individual tribal officials in order to avoid a sovereign immunity claim by the tribe itself.

So far, however, states have not been all that successful in taking tribal-owned payday lenders to court. New York was able to reach a settlement with a payday lender that was owned by an individual tribal member.

On the other hand, the federal courts have held that tribal lenders cannot avoid scrutiny from federal agencies such as the Federal Trade Commission.

Get the Story:
SCOTUS Decision Proves States Have Power Over Payday Lenders Claiming Tribal Affiliation (The Consumerist 5/29)

Supreme Court Decision:
Michigan v. Bay Mills Indian Community (May 27, 2014)