Tribes' payday loans under scrutiny

Brandon said he was unable to share financial returns for his group's members or even to quantify the scope of outstanding loans.

Who actually runs the loan operations? "They are wholly owned and operated by the tribes," Brandon insisted — at first.

But there have been reports of some tribes extending their sovereign status to non-Indian payday lenders in what some have called "rent a tribe" deals.

The Federal Trade Commission filed a lawsuit last year against AMG Services, a Kansas payday loan company that allegedly tied up with Indian tribes to avoid state regulations.

According to the FTC suit, AMG, founded by race car driver Scott Tucker, claimed that it was owned by the Miami and Modoc tribes of Oklahoma and the Santee Sioux of Nebraska. But Colorado officials, who also are trying to crack down on tribal lenders, have said in separate state court hearings that the tribes received only a small fraction of AMG's earnings.

The FTC's lawsuit is pending.

Brandon finally acknowledged to me that some tribes do indeed work with others to fund or run their payday lending, just as some Indian casinos bring in outside management teams with gambling-industry experience.

In response to emailed questions, Marshal Pierite, vice chairman of the Tunica-Biloxi tribe, said Mobiloans "provides a vital service to a large population of American consumers who lack access to traditional credit services."

He said the company adheres to "all applicable lending laws."

But there's the rub. Mobiloans and other tribal lenders don't believe state rules are applicable — and so far, the courts have agreed with them.

Attempts by California and Colorado officials to regulate tribal lenders have been rebuffed by appellate courts, which based their thinking largely on a 1987 U.S. Supreme Court ruling that laid out broad legal immunity for tribes from state and local laws.

A big question now is how much authority the federal Consumer Financial Protection Bureau has over tribal lenders. The answer is unclear, and a legal battle is almost inevitable.

Richard Cordray, the director of the bureau, served notice last year that he believes his agency has jurisdiction over tribal lenders.

"If there is legitimately a tribal entity that can oust a state of effective jurisdiction to enforce laws against that entity, it does not oust the federal government," he said.

Brandon at the Native American Financial group said tribes may be willing to compromise by accepting the consumer bureau as a "co-regulator" of the industry, along with the tribes' own oversight of loan businesses.

Meanwhile, Sen. Jeff Merkley (D-Ore.) has sponsored the Stopping Abuse and Fraud in Electronic Lending Act, which, among other things, would require online lenders to abide by the rules of the state where a borrower lives.

This would theoretically require tribal lenders to follow state regulations or not do business in a particular state.

Barry, the Mobiloans customer, said he now wishes he had resisted the Tunica-Biloxi tribe's pitch for what looked like easy money.

I asked what advice he has for anyone else who receives a solicitation from this or another tribal lender.

"Start running," Barry replied.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.

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