Business | Law | National | Technology

Blog: Tribes act as fronts for major Internet lending businesses

Friday, March 21, 2014

WhoWhatWhy says big money interests in Wall Street and Silicon Valley are using tribes as fronts for controversial Internet lending businesses:

If frontier-mentality Americans foisting themselves on the poor back in the “old country” isn’t enough, now they’re pressing the natives of the new land into the shady scheme as well.
In 2010, as new state laws began to pinch the payday lending industry, ThinkCash changed its name. It became Think Finance, and the firm began offering a “technology platform” to a new groups of “partners”: Native American tribes.
Some of Silicon Valley’s most prominent venture capital firms are among Think Finance’s biggest backers—including Sequoia Capital, founded by the legendary venture capitalist, Don Valentine. Yes, that means Valentine’s Sequoia—a backer of Apple, Google and YouTube, among others—is now in the tribal payday lending business.
How does the tribal deal work? Think Finance provides— at a publicly undisclosed cost— its “technology platform” to firms incorporated on Native American lands. Those tribal firms then market and sell payday loans—but not to tribal members. Instead, the program goes online to pitch everyday Americans around the country, even in states that limit or ban such loans.
The point, says Standaert, is to cloak a lending operation in the guise of tribal sovereignty. This is for “the express purpose of asserting the tribes’ immunity from suit.” It’s simple: Under federal law established in 1978 in the case of Santa Clara Pueblo v. Martinez, Native American tribes generally can’t be sued.
Just how much the tribes benefit from these arrangements is hard to say. But in some cases, there is evidence the tribal firms have operated as little more than “fronts” for non-tribal payday lenders.

Get the Story:
Christopher Scholl: How Silicon Valley and Wall Street Investors Profit From 300% Interest (WhoWhatWhy 3/21)