Payday Loans and the Tribal Sovereignty Model


Think about what happens when you pit tribal sovereign immunity against effective consumer protection laws. In my view, no one wins. Yet payday lenders are now very actively seeking tribes with whom to partner, in order to get the benefits of tribal sovereign immunity.  As one might expect, the payday lenders make out big and in most cases, the tribes get very little, at least so far.

Many news reports have come out describing these new relationships, and today another caught my eye, this time in The Fresno Bee. The article mentions how three tribes and their loan business partners were sued by the Federal Trade Commission after consumers complained about their business practices. This Fresno article also mentions a new payday loan trade association called Native American Financial Services Association, which caters to these new alliances.

Before you jump to conclusions about the legitimacy of all this, realize that it is complicated.  Tribal self- determination is critical to a just society, since justice never flows from oppression. Consumer protection is also important to a just society.  Read more about this conflict in my and Josh Schwartz’s article, The Alliance Between Payday Lenders and Tribes: Are Both Tribal Sovereignty and Consumer Protection at Risk?

Turtle Talk, one of the most influential legal blogs in the U.S. recently commented on our paper, calling it balanced (admittedly not a word often used to describe my approach to payday lending). Turtle Talk is a fantastic blog and has been following the payday - tribal sovereignty issue closely. I hope you’ll check out Turtle Talk often, just to expose yourself to the kinds of issues that come up in Indian country. Obviously, like any other group of Americans, not all Native Americans agree on everything, including the value of taking up payday lending.