Payday lending companies owned by two Oklahoma Indian tribes have agreed to stop using aggressive collection techniques, including threatening borrowers with lawsuits and arrest, in a partial settlement with the Federal Trade Commission.
The payday lending companies, owned by the Oklahoma-based Miami and Modoc tribes, also have agreed to stop requiring borrowers to agree to automatic drafts from their bank accounts to be approved for a loan.
The terms of the settlement were approved by a U.S. District Court judge in Nevada this month.
The FTC is still pursuing claims against the tribes and payday lenders alleging that the companies have deceived their customers by levying hidden fees and inflated charges.
An attorney for the tribes did not respond to a request for comment about the settlement on Monday.
The federal government moved to sue several online payday lending companies owned by the Miami and Modoc, along with tribes themselves, in 2012 alleging deceptive trade practices after receiving thousands of complaints from consumers.
Both based in Miami, OK, the tribes own several online payday lending companies. The Modoc tribe has about 250 members, and is the smallest federally recognized tribe in the state, while the Miami tribe has about 3,800 members.
Although the payday lenders claim to be owned by the Indian tribes and therefore outside of the reach of many state and federal laws, the FTC alleges the companies are primarily controlled by race car driver Scott Tucker, who gives the tribes a cut of the profits.
The Oklahoma Department of Consumer Credit regulates payday lenders in the state, but does not have jurisdiction over the online lending companies owned by the Miami and Modoc tribes because the tribes have sovereign status and are not subject to state laws that protect state consumers, said Roy John Martin, general counsel for the Department of Consumer Credit.
Although the agency receives complaints from consumers about the tribal lenders, there is little the state can do because of the tribes' sovereign status, Martin said.
“The majority of complaints have to do with collection practices, fees, repeatedly debiting bank accounts,” Martin said.
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