Opinion: Tribes turn their acumen to Internet lending industry

Although it’s common knowledge among Americans of the wide spread existence of Indian casinos — which offer a market priced product that vacationing Americans have come to enjoy and rely on – it is not known that the business acumen of the American Indian has widened with the proliferation of payday loan centers across the United States.

With interest rates that vacillate anywhere from 30 percent to 700 percent, it is no wonder that some American Indian tribes have been labeled “rent-a-tribe” by a handful of state attorney generals.

Last July, the Minnesota attorney general, Lori Swenson, took to court the California-based CashCall, in what Swenson described as an Internet-based “rent-a-tribe” scheme.

Furthermore, Swenson accused CashCall and its subsidiaries of charging illegally high interest rates on their consumer loan products, all the while fraudulently insisting that the loans are subject to tribal sovereign immunity as defined by federal law because the actual loans are made by a South Dakota company called Western Sky Financial – which is owned by a member of an American Indian tribe.

In January, in another lawsuit against CashCall, New York Attorney General Eric Schneiderman announced that his office had settled with the payday loan center after accusing it of illegally charging borrowers 100 percent plus interest rates.

Similar to the Minnesota case, Western Sky Financial and its owners were sued for purporting a scheme to consumers. The settlement in New York provided up to $35 million in debt relief, along with $1.5 million in penalties.