By: Allen Parker. Consultants4Tribes.com
While not an attorney, I have been introducing tribes and lenders for almost two years. The Magistrate’s ruling supports several points I’ve made on my blog, consultants4tribes.com, during those two years.
Notwithstanding the fact that the sovereign immunity of federally recognized tribes extends to their wholly-owned lending businesses, those businesses must comply with federal consumer regulations whether operated in-house or contracted out. The defendants violated “…Section 5 of the FTC Act, the Electronic Fund Transfer Act, and the Truth in Lending Act in their payday loan practices,” all federal consumer regulations.
Sovereign immunity does not extend to lenders that manage the tribally-owned businesses. From a lender’s perspective, the primary benefit of working with a tribally-owned business is that the business is exempt from complying with state regulations, not those of the federal government.
Sovereign immunity does not extend to tribal members, only tribally-owned businesses. As best as I can tell, the Magistrate’s decision did not challenge the concept of sovereign immunity. It simply underscored the fact that tribally-owned lending businesses must comply with federal consumer regulations.
Allen Parker, President