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RSSCourt Blocks Colorado AG from Investigating Tribes’ Online Payday Loans
February 18th, 2012
Court rules in favor of tribes operating online payday loans
According to a court ruling this week, the Colorado Attorney General’s office can no longer investigate two American Indian tribes offering online payday loans. Denver District Court Judge Morris Hoffman ruled that the Miami tribe of Oklahoma and the Santee Sioux Nation of Nebraska are protected by tribal sovereign immunity laws from state investigation.
8 Years
The ruling culminates eight years of inquiries by the Attorney General’s office over allegations that Colorado residents were victimized by high-interest-rate payday loans that violated state laws. The ability of Indian tribes to conduct Internet commerce without regulatory oversight by states is “the bedrock of tribal sovereignty and it is refreshing to see that the court got it right,” said Barry Brandon, executive director of the Native American Fair Commerce Coalition, an advocacy group for tribes engaging in online business.
Disappointing
The Attorney General’s office termed the ruling “disappointing.” “We remain concerned at the proliferation of online payday lenders who are operating in violation of Colorado law and harming Colorado consumers,” said Jan Zavislan, deputy attorney general and head of the office’s consumer protection division. The office has not determined if it will appeal the ruling.
Payday lenders
Payday lenders issue short-term loans, typically at significantly higher interest rates than bank loans. Colorado in 2010 passed a law with more consumer protections on payday lending, but the loans investigated by the Attorney General allegedly violated even the looser regulations in effect prior to 2010. The AG’s office has alleged that the loan companies, Cash Advance and Preferred Cash Loans, are controlled by Overland Park, Kan. businessman Scott Tucker, and that the tribal affiliations were created to circumvent state regulations.
“Rent-a-tribe”
Hoffman said in the court ruling that “the state has failed to prove that the tribes do not own and operate these tribal entities” that are listed as the owners of the payday loan companies.
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