Payday Loan Tribe-Sovereign Nation Model by Marc Benjamin at The Fresno Bee
Published: Thu, 07/12/12
the payday loan tribe-sovereign nation model!
The payday loan industry generates $52 billion worldwide each year,
and Chukchansi officials hope to get a piece of it. They're not
alone; about three dozen tribes are in the business across the
United States, said Allen Parker http://www.Consultants4Tribes.com
a California consultant who works with tribes nationwide.
It's an ideal business opportunity for tribes in locations too
remote to operate a casino successfully, or for tribes whose casino
revenues are down.
Although a tribe may need to hire a consultant or management group
that takes a cut of profits and ensures the business is run
properly, the overall costs can be lower because the tribe
doesn't have to follow state rules, said Jer Ayler, http://www.PaydayLoanIndustryBlog.com
a Newport Beach consultant who runs payday loan storefront businesses and
helps tribes with online loan businesses.
That angers regular payday lenders who have to comply with state
laws and limits, he said.
"You'd be mad if you spent millions of dollars on
compliance and regulatory issues compared with a tribe that can
enter with very little capital and utilize the sovereign model to
exempt themselves from state licensing regulations and usury
laws," Ayler said.
But a Los Angeles County Superior Court judge said tribes are not
subject to California licensing rules because of sovereign
immunity, said Mark Leyes, a Corporations Department spokesman.
Sovereign immunity may also provide protection in federal court.
Three tribes and their loan business partners were sued in April by
the Federal Trade Commission after more than 7,500 consumer
complaints over the last five years.
In the federal case, tribes are accused of overcharging for loans
and illegally filing lawsuits against customers. In one case, a
company forced consumers who owed them money to travel to South
Dakota and face a tribal court that did not have jurisdiction over
their cases.
Other contentions made in the federal case: employers were falsely
told by tribal companies that they had legal court orders to
garnish wages, and tribal companies disclosed an employee's
debt information to employers and coworkers.
The federal case detailed where a loan company charged interest
rates and fees totaling $1,925 to pay off a $500 loan.
"We are concerned that the loan documents and website
representations are truthful and complete," said Nikhil
Singhvi, a lawyer for the Federal Trade Commission in Washington,
D.C.
But the tribes' lawyer, John Nyhan, who represented two of the
same tribes in the recent California case, said he expects the
federal government's case to be dismissed in the tribes'
favor because of sovereign immunity.
Meanwhile, the Native American Financial Services Association is
aiming to reduce those types of suits by setting ethical guidelines
for tribes to follow when dealing with customers.
Read more:
http://paydayloanindustryblog.com/payday-loan-tribe-sovereign-nation-model-by-marc-benjamin-at-the-fresno-bee/#ixzz20NnxaXIN
Read more here:
http://www.fresnobee.com/2012/07/10/2905151_p2/payday-loans-the-latest-venture.html#storylink=cpy