Some payday lenders dodge state laws
Payday lenders are dodging regulators by claiming affiliations with Indian tribes, a West Virginia assistant attorney general said.
With the Internet making it hard to locate some lenders, Assistant Attorney General Norman Googel said
shams used by payday lenders, included claiming they were either part of an Indian tribe or an overseas business, the Los Angeles Times reported Monday.
A suit in West Virginia settled last fall closed the accounts of nearly 1,000 customers and reached agreements with lenders affiliated with the Miami and Modoc tribes of Oklahoma and the Santee Sioux of Nebraska. The settlement included agreements the businesses cease doing business in West Virginia, the Times said.
But, other states are finding it hard to prosecute cases with companies claiming protection through affiliation with Indian tribes.
John Nyhan, a California attorney for two Indian tribes told the newspaper that the lenders
have immunity from state laws.
Others say the companies have little to do with the tribes but are
renting tie-ins to tribes, the newspaper said.
For some, the industry, where annualized interest rates can run as high as 495 percent, is rife with problems.
This is a debt trap on steroids, Jean Ann Fox, director of financial services for the Consumer Federation of America in Washington, said to the Times.