Payday Loan Companies Working With Native American Tribes- Why Do They Do It?
Research has found that Native American tribes in the U.S. have made arrangements with some payday lenders in order to evade existing consumer protection regulations.
Before joining Public Justice, staff lawyer Leslie Bailey said the first case she worked on was a “completely isolated one.”
“We found that there was a powerful push for payday lending going on.” When tribal companies cannot be sued for breaking state consumer protection laws, this is known as tribal sovereignty.
One of the tribes, Bailey claimed, would have been approached by payday lenders, which were already established and had no tribal members.
One in four Native Americans lives in poverty according to the Pew Research Center. Because the land and resources are typically insufficient to cover the tribe’s needs, tribes commonly find themselves in financial difficulties.
Bailey claimed that “However, when we tracked cases, we found that the tribe consistently received a little profit.” “As we were talking about corporations raking in millions of dollars, CEOs bringing home millions of dollars, and tribes getting just a fraction of the money, I mentioned how peculiar that is.”
She stated that she felt the chance of it being successful was minimal, and she preferred to get some compensation, rather than receive no compensation at all.
The Navajo Nation, Gila River Tohono O’odham, Hopi tribes, and Gila River declined to be interviewed for this report.
The Public Justice Report study found that payday lending businesses charged interest rates significantly above state and federal laws, with some loans carrying interest rates as high as 700 percent.
“These businesses understood that they would be sued and were taking advantage of customers in that regard.”
According to Bailey, they’d be bringing in company papers that looked real, which meant they seemed to be tribal. And thus, the suits departed, and the fight for tribal sovereignty commenced.
In between came Scott Tucker, a wealthy payday lending entrepreneur. Tucker was recently found guilty of unlawful loan practices that had harmed over four million consumers.
The Miami Indian tribe has an affiliate relationship with CLK Management.
Federal prosecutor said that Tucker paid $120,000 to the tribe for its use in the Tucker trial. His payday lending firms made almost $3.5 billion, yet he was arrested on money laundering charges instead.
One of the plaintiffs, Bailey, asserted that the courts will see beyond these tribal documents and recognize that they’ve been deceived once they discover where the money is coming from and leaving.
The Cash Cloud Arizona-based LLC was also highlighted in the research. While tribal authority has the last say in many situations, Baile also noted that, in many cases, it is the tribal leadership that makes the call.
However, when they heard the terms of the offer, the tribal chiefs stated that they would not agree to it. To make matters worse, a renegade tribal member negotiated a deal with the tribe to enable them to use their name.
The tribal chiefs questioned afterwards stated that they were unaware of the fact that their tribe’s name was being exploited.
Tucker’s high-profile trial and sentence have led to increased public awareness of this type of behavior, which may assist to bring an end to it.
In the interview, Bailey said that payday lenders are renowned for circumventing consumer protection regulations by inventing loopholes. Additionally, he said that they have refined several effective techniques throughout the years. We have to pay greater attention.