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Internet Payday Loan Companies Accused of Hiding behind Immunity

person holding a tablet with the national trial lawyers news webpage on the screen; July 29, 2013

In the continuing crackdown against high interest Internet payday loans and predatory lending, the State of Minnesota is challenging the growing practice by lenders of hiding behind cloaks of immunity available through sovereign communities in an effort to get around State laws that govern interest rates and other financial terms.

To wit, Internet payday loan companies appear to be partnering with tribes and first nations communities - the latter eager to ease financial difficulties at their reserves, with the former taking advantage of sovereign immunities available through the tribal communities to duck under the radar of state regulatory authority.

As described in a published report by the Star Tribune (7/12/13), it is alleged that Internet payday loans are made by Western Sky Financial Inc., a company reportedly based in South Dakota and owned by an American Indian. As a member of a tribal community, the owner can reportedly circumvent state laws. The loans are then sold to an Internet payday loan company known as CashCall, of California.

The practice is known within financial circles as “rent-a-tribe,” and is something the State of Minnesota is attempting to shut down. To that end, an Internet payday loan lawsuit has been filed jointly by the Office of the Attorney General for the State of Minnesota and the Office of the Commerce Commissioner naming CashCall Inc. and its two subsidiaries.

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