By Allen Parker, Founder Consultants4Tribes.com: Courts Continue to Debate Validity of iIdian-Owned Payday Lenders.
This matter is currently before the courts in Colorado which you can find at http://www.publicintegrity.org/2011/12/20/7716/courts-debate-validity-indian-owned-payday-lenders
While I will not comment on the specifics of this case, I can generically state that tribes more often than not prevail when it comes to attacks on sovereign immunity which has been bestowed upon federally recognized tribes by both Congress and the U.S. Supreme Court. Nonetheless, these early examples of “rent a tribe” relationships between tribes and PDLs, while legal from a sovereignty standpoint, have served as examples of what not to do.
My firm brokers business relationships between federally recognized tribes and PDLs. Today, these are the tenets that guide us:
• The online business must be 100% owned by the tribe.
• The tribe, in turn, contracts with a PDL to service, market and operate the tribe’s business. This is not unlike tribally-owned casinos which have contracted with experienced casino operators such as Harrah’s to manage the business on the tribe’s behalf.
• The PDL may also provide start-up working capital and loan the tribe funds from which the tribe makes its loans to individuals. These funds are repaid the PDL once the individual loan is repaid the tribe. Again, this is not unlike tribally-owned casinos which have been financed by outside interests, sometimes other tribes such as the Mohegan Sun. These outside interests are then repaid from future cash flows of the casinos.
• The contracts include consumer protection language, to wit: “In collecting payments owed under the notes, the Company shall comply in all material respects with applicable law, including without limitation the Fair Debt Collection Practices Act (the “FDCPA”) and applicable debt collection regulations and consumer protection laws applicable to the Company and the Best Practices of the Community Financial Services Association of America. The Company shall not encourage or allow its employees to threaten or imply that failure to honor any payment instrument in connection with any loan shall subject the borrower to potential criminal prosecution.”
At the current time, we have linked six(s) PDLs with three (3) federally recognized tribes using the tenets described above.Allen Parker Allen@Consultants4Tribes.com Reach out for help: 951-260-8149