Business | Opinion

Opinion: Payday lenders hide behind tribal sovereign immunity

Monday, February 14, 2011

"A curious situation came to the attention of regulators some five years ago as they were looking into complaints about online payday lenders.

The folks who were doing the lending claimed to be arms of Indian tribes based in other states, and as such, their tribal sovereign immunity gave them protection against state regulators.

The Colorado Attorney General's office was unconvinced, and the drama has since played out quietly in the state court system, with a Colorado Supreme Court decision issued in November that leaves a central question yet to be definitively answered:

Are these operations legitimate arms of Native American tribes or are they, as one consumer advocate asserted in court documents, "fringe lenders" who are using a "rent-a-tribe" scheme to escape regulation?

Lawyers for the tribes — the Miami Nation of Oklahoma and the Santee Sioux Nation — strenuously object to such characterizations.

They contend the state has engaged in a "protracted, caustic assault" on the tribes and their business entities. Those entities, they say, have done everything necessary to prove their affiliation with the tribes, including providing more than 3,300 pages of documents to the state.

The details will be explored at the trial court level, where the case has been sent for additional action."

Get the Story:
Alicia Caldwell: Hiding behind a tribe (The Denver Post 2/13)