"Western Sky Financial’s website features a logo with three teepees and a toll-free number for customers to apply for an overnight loan. A notice at the bottom of the page says that the company is “owned wholly by an individual Tribal Member of the Cheyenne River Sioux Tribe.”

Western Sky’s owner, Martin Webb, and other lenders say their relationships with Native American tribes, whose sovereign governments are separate from the states’, protect them from having to comply with state laws that regulate payday lenders.

It’s a trend that has emerged as the latest hurdle in some states’ efforts to tighten regulations for payday lenders whose high interest rates, critics say, trap borrowers in a cycle of debt.

An investigation by the Center for Public Integrity published last month found that affiliating with tribes is a method some Internet payday lenders are using to skirt existing laws and oversight as they make short-term loans to consumers nationwide. While the 2010 financial reform law gives the new Consumer Financial Protection Bureau the power to regulate payday lenders, it remains to be seen whether the agency will crack down on lenders using tribes to claim sovereign immunity.

A new exchange between Maryland regulators and the South Dakota-based Western Sky has opened the latest front in the sticky legal question of who is eligible for tribal immunity."

Get the Story:
Maryland challenges online payday lender owned by tribal member (The Center for Public Integrity 3/21)

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Opinion: Payday lenders hide behind tribal sovereign immunity (2/14)
Payday loans a new revenue stream for some in Indian Country (2/10)
Center: Payday lenders turning to tribes to avoid state jurisdictions (2/7)