Not all Native Americans are Doing, Let Alone Getting Rich Off, Payd...


 The Wall Street Journal has run several stories over the past few years about how Indian Tribes are getting rich off payday lending. These stories always tell a fraction of this story, leaving readers with the misperception that all tribes do this lending and that those who do, get rich. The reality is that only a small percentage of Native people do payday lending, and the only people getting rich off these operations are non-tribal lenders that use tribes to get around state laws. A week or two ago, it happened again. The Wall Street Journal published Payday Loans Have Brought Jobs and Revenue, but Tribal Leaders Say Government Crackdown Jeopardizes Business, once again claiming that tribes are getting rich off this business.

The article, also about operation choke point, claims that payday loan revenues make up one-fifth of the revenue on some tribal lands, but give no details on the dollars made. The story quotes one tribal member making $10 an hour, as well as the head of the Native American Financial Services Association, which represents just 19 of the 566 federal registered Indian Tribes. These people like tribal payday lending. But they are but one tiny voice in the debate as most tribes neither engage in nor condone this business. A July 17, 2014, an Al Jazeera story also covered operation choke point but told a very different story. This article entitled When tribes Team Up With Payday Lenders, Who Profitsdescribes exactly how tribal payday lending (part of the four billion dollar online payday loans industry) works. Little of the revenue flows to the tribe, sometimes 1% of the loan, or even just a finder’s fee of $2.50 to $5.00 per loan.

The tribal members in these communities often look more like the cash-strapped customers of these loans than like villainous tycoons preying on low-income Americans. Indeed, native people have frequently been victims of high-cost lending and some are not willing to participate in doing the same to others. See this other Al Jazeera article.

Even those who are willing find themselves far from rich. At one of the California reservations featured in Al Jazeera, the lending brings no jobs to the reservation whatsoever. These tribes appear online as the owners of payday lending enterprises. But the call centers and other operations are elsewhere, and the tribes themselves get as little as 1 percent of the revenue. If you’d like to learn more about this, listen to this radio show,  featuring Shawn Spruce, a financial advisor to tribal people stuck in high-cost loans, and the read this very recent article by Jonathan Thompson from High Country News found here.

Consider also that in many communities, including border towns to Native American communities, storefront payday and title lending is the most prevalent business there is. Many (most) Native people are not willing to participate themselves. You be the judge but just know that there is more to this story than what you read in the Wall Street Journal.