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Federal Trade Commission seeks to shut down tribes' online payday businesses

Online payday lending operations owned by two Oklahoma Indian tribes deceived and bullied customers, a federal complaint filed Monday states. In earlier cases against some of the same firms, the tribes have successfully argued that they are exempt from government oversight.
by Don Mecoy Published: April 3, 2012

The Federal Trade Commission said the defendants' claims of tribal affiliation do not exempt them from complying with federal law.

Barry Brandon, executive director of the Native American Fair Commerce Coalition, last month endorsed the Colorado decision, saying “the court got it right.”

On Monday, Brandon declined to comment specifically on the FTC complaint, which he had not seen.

“I guess I'm surprised that the FTC is making those arguments” on tribal sovereignty, Brandon said.

“That gives me some pause in terms of wanting to know more factually of whether or not the FTC in its investigation may have uncovered some flaw in the way that the tribe has preceded,” Brandon said.

“Generally, our reaction is that we're supportive of a tribe's sovereign right to engage in economic development and we urge our tribal members to play by the rules and to create a good regulatory structure and to make sure that we are in line with those standards as enunciated by the court in Colorado.”

The Miami and Modoc tribes are not members of the Native American Fair Commerce Coalition, he said.

State's take

After The Oklahoman published a story in January about the tribes' payday loan operations, the administrator of the Oklahoma Department of Consumer Credit said such businesses should be subject to state oversight. That agency licenses payday loan companies that operate in Oklahoma.

“Our department is respectful of tribal sovereign immunity, but it is my opinion that there is a difference between an Oklahoma consumer conducting business with a tribal entity on tribal land as opposed to tribal entities conducting business with Oklahoma consumers via the Internet,” Scott Lesher said in a statement.

“Tribal lenders that enter into payday loan products with Oklahoma consumers via the Internet should be subject to Oklahoma regulations because such entities are operating outside the boundaries of tribal land,” he said.

The Better Business Bureau for Eastern Oklahoma lists hundreds of complaints against online companies owned by the two Oklahoma tribes.

The bureau issued a consumer warning last month about the potential danger of some online payday lenders “that claim they are not beholden to state or federal laws regarding licensing requirements, debt collection practices or caps on interest rates.”

FTC filing
by Don Mecoy
Business Editor
Business Editor Don Mecoy has covered business news for more than a decade after earlier working on The Oklahoman's city, state and metro news desks, including a stint as city editor. He has won state and regional journalism awards for business,...
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