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Court Dismisses Case Against Native American Payday Lenders


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By: Javi Calderon

Court Dismisses Case Against Native American Payday Lenders 

After eight years of building a case, the District Court of Denver has ruled that the Colorado Attorney General can no longer investigate two American Indian tribes that offer online payday loans to the citizens of Colorado. Despite the fact that the Attorney General has been receiving complaints about the lenders, and that they are in violation of Colorado short term lending laws, the court decided that due to tribal sovereign immunity laws the tribes were exempt from regulatory oversight. 

In 2004 the AG subpoenaed two payday loan lenders associated with the Miami Tribe of Oklahoma and the Santee Sioux Nation of Nebraska. In their case, the AG argued that the two companies were actually controlled by a Kansas businessman, who has negotiated tribal affiliation in order to side-step state regulations. 

The subpoenas ordered the companies and tribes to submit copious amounts of information regarding their payday lending procedures. The District Court judge ruled that the AG had not sufficiently proved that the lenders were not tribe businesses. Even though the state showed that one person (the non-native American business man from Kansas) operates the companies, the court decided that a three-part test is needed to determine that the lenders are not “arms” of the tribes. 

The Supreme Court stressed that immunity is dependent on the relationship between the tribe and the company, not the activities the companies’ undertake. The judge even added that no matter why the deal was negotiated, business partners of the tribes should be protected under the immunity law. 

The executive director of the Native American Fair Commerce Coalition believes that Indian tribes’ ability to avoid regulatory oversight when conducting ecommerce is the, “bedrock of tribal sovereignty.” 

Currently Colorado allows short-term loans that are six months long. Lenders can charge a $75 origination fees and monthly fees of up to $30. Customers are encouraged to repay their loans early. 

The AG still has the option of appealing the decision.  


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