Tag: The Payday Loan Sovereign Nation Model

22
Apr

Payday Loans-Offshore-Tribe-State-by-State, Call Centers, Licensing

As those of you who receive my Monthly Newsletter know, the past 30+ days I’ve visited Cancun Mexico, Miami, the Bahamas (Nassau) and, as I write this, San Jose, Costa Rica. All of these fact-finding trips focused on various payday loan licensing models and outsourcing of various integral pieces of payday loan operations to service payday loan consumers and develop strategies to profit in our industry.

I always get some “heat” for discussing these issues and strategies! Some of us are making serious money in the payday loan space and want to “keep it a secret.” Others already in our space worry that the  CFPB and State  AG’s will become aware of our methods and “attack”us. (DUH, they know we exist and when setup by pros there is zip they can do. Just follow TILA, FDCPA, disclose everything clearly and don’t beat on your customers!)

Operators with brick-n-mortars are sometimes envious of the perceived simplicity and low barrier to entry into the Internet payday loan space. Many Internet operators sweat out state/provincial licensing approaches.  Then you have all the brick-n-mortar players who think because they have a solid management Team in place it’s a simple transition to the internet. Nothing could be farther from the truth!

Store-front expertise doesn’t mean jack when attempting to build a successful Internet payday loan operation! I’ve seen very experienced store Teams fail miserably at managing Internet portfolios. You need a much different skill-set and some experienced partners when you have to rely on buying payday loan leads, providing round the clock call-center services, collecting $500 from a consumer in default 1000+ miles away from you, re- marketing to your existing customer base, taking market share away from your competitors, being compliant with all the State/Federal/Provincial laws and regs, getting your payday loan software provider to respond to your requests for support, maintaining a <1% charge-back ratio with your ACH provider and dealing with all the other hassles and risks in the payday loan industry. And let’s not leave out your Search Engine Optimization, Search Engine Marketing, Adwords and Bing account managers and on and on and on.

Why do it? The money! Done well, I know of very little else offering the ROI of payday loan businesses.

You don’t have to have all these skill sets in-house. Find “partners” and vendors that provide the pieces you’re missing. It’s one thing to buy 50 leads/day, and fund 10 of them. Depending on your lead source, your under writing criteria, and your collections Team, this could be accomplished in a small office anywhere using any off-the-shelf software.

But to reach serious velocity, and we estimate at least 325,000 payday loans occur daily just in the  in the U.S., you must evaluate what you bring to the table (capital, legal, marketing, collections, IT, call center expertise…) and create your “secret sauce.”

I’ll follow up on these issues shortly. I’m  wrapping up a convention focused on offshore based payday companies using call centers, lawyers, taxation pros, bankers and financiers and more in Costa Rica this week. These are pros from around the world. The tribes are well represented as well and offer some enticing, sophisticated “boiler plate” that can enable you to reach your goal.

Do you want to thoroughly understand the tribal/sovereign nation model? It’s basically the Texas CSO payday loan business model. The strategy is to employ a “servicer/marketer” and a” Lender.” Read our highly popular CSO/CAB Report and you’re on the road to understanding the payday loan tribe model. Get this… It’s the last item we offer here: http://paydaymanual.com/cash-advance-store.html

And don’t bother to start harping on tax evasion. These business models incorporate methods and strategies to service consumers around the world including The U.S., Canada, AU, Mexico, Scandinavia, Europe, The UK and many more locales. Cost reduction and tax minimization are the goals – just like Google, Coca Cola, IBM, Microsoft and more.

Finally, regarding all you guys that think it’s too late to start a payday loan, car title, scrap gold buying, tax service and more all under one-roof, complementing one another, quit crying! I speak with very competent, multi-unit store owners who are salivating over what they perceive to be a tremendous growth  opportunity.

You want to finally get off the dime and start playing in the ruff and tumble payday loan industry?Put some smart guys together in a room, and build a Team with complimentary skill sets to achieve the dream and IT CAN STILL BE DONE! Pay for solid experience to guide you, find the right vendors to help you down the path and you too can attend Payday Loan – micro-lending conventions around the world on the Governments dime – seek legal counsel :o)

Jer@TrihouseConsulting.com

http://www.PaydayManual.com

702-208-6736

 

21
Mar

Jer Ayles-Ayler Trihouse on the Road with Payday Loans & More

Sorry everyone! I’ve been “on the road” the past MANY days. It started with the annual CFSA Payday Loan Convention in Hollywood, Florida. Then, I visited clients in Miami, Orlando, Key West (Thanks Steve! That was FUN!), Atlanta, Nashville, Clarksville and finally the 25th Annual Reservation Economic Summit (RES 2011) & American Indian Business Trade Fair in Las Vegas.

Man, The Sovereign Nation payday loan model is HOT! After that Wall Street Journal article, a lot of Tribe’s are wondering, “Why aren’t we doing this?” Looks like more will be…

The Payday Loan Offshore Model is making more and more sense as well. More than few significant players are entering this space.

I’ve got a LOT of comments and insight in AFS (payday loans, check cashing, currency exchange, money transfer, car title loans, tax refunds…) products and services coming so stay tuned!

Jer@PaydayLoanIndustryBlog.com

702-889-9555

22
Dec

Payday Loans, Indian Reservations & Sovereign Nations

The Metropolitan News Enterprise ran an extremely interesting article regarding The Payday Loan Sovereign Nation Model as employed by several Indian Tribes.

In essence, the Division 7 Court of Appeals ruled that several payday loan companies in partnership with the two indian tribes sued by the California Department of Corporations have sovereign immunity and are NOT subject to California payday loan lending statutes and regulation.

This is a fantastic development as we have facilitated the organization and implementation of the  Request More Info Sovereign Nation Payday Loan Model.

Here is a Reprint
Div. Seven Monday granted a writ of mandate sought by five companies
asserting tribal immunity in an action brought by the California Department
of Corporations. The panel overturned an injunction and sent the case back
to the trial court for a determination of whether the relationship between
the tribes and the companies satisfies the requirements for immunity.

The department sued in June of last year, charging that Ameriloan, US Fast
Cash, United Cash Loans, Preferred Cash and One Click Cash had ignored its
“cease and desist” orders and were violating the Deferred Deposit
Transaction Law by lending without state licenses and charging excessive
fees, among other ways.

Internet-Based Business

The companies are engaged in a largely  Internet-based business of lending
money short-term to borrowers who pay back the loans by authorizing
repayment from their checking accounts on specific dates, typically on the
next payday. The business is controversial because the loans carry huge
charges, without regard to the number of days for which the money is
borrowed, and has been regulated to the point at which it is virtually
outlawed in some states.

In response to service of the complaint on the companies, The Miami Tribe of
Oklahoma and the Santee Sioux Nation appeared specially in the action and
moved to quash for lack of jurisdiction. The tribes asserted that the five
defendants were operated by tribal corporations pursuant to tribal
resolutions, that the proceeds of the businesses were used for tribal
government and social welfare purposes, and that the lenders were arms of
the tribes and shared the tribes’ immunity from being sued in the absence of
express congressional authorization or waiver.

Retired Los Angeles Superior Court Judge Joseph R. Kalin, sitting on
assignment, denied the motions and granted a preliminary injunction barring
the companies from engaging in the allegedly unlawful practices set forth in
the complaint. He ruled that the tribes are not immune from liability for
off-reservation commercial activities and that the state’s power to enforce
its laws under the Tenth Amendment takes precedence over their claims of
immunity.

He also ruled that the tribes had waived any immunity, the Miami because the
tribal corporation operating the businesses was created by a resolution
authorizing it to “sue and be sued,” and both tribes because arbitration
clauses were included in their standard loan agreements.

Presiding Justice Dennis Perluss, however, writing for the Court of Appeal,
said the trial judge erred in several respects.

Tribal sovereign immunity, Perluss said, will apply to off-reservation
commercial conduct if the predicates for such immunity are met. He
distinguished cases holding that states may regulate tribal commercial
activities occurring on nontribal lands.

Those cases, the presiding justice explained, concerned preemption, not
sovereign immunity. The U.S. Supreme Court, Perluss noted, has recognized
that “[t]here is a difference between the right to demand compliance with
state laws and the means available to enforce them.”

Tenth Amendment

Nor, Perluss said, will the Tenth Amendment override the tribes’ immunity
from actions to enforce lending laws. Such actions, he said, are
distinguishable from those of the type discussed by the Supreme Court in
Agua Caliente Band of Cahuilla Indians v. Superior Court (2006) 40 Cal.4th
239.

In Agua Caliente, the state high court said the state had a right to
enforce campaign contribution reporting laws in administrative proceedings
against Indian tribes. The court said the case involved “unique
circumstances” and that the peoples’ right to a  republican form of
government, as well as the reservation of rights by the states under the
Tenth Amendment, allow the state to insist that tribes obey the same
regulations as other donors.

That ruling is limited to the unique field of campaign reform and does not,
Perluss wrote, permit “a broad abrogation of the doctrine of tribal
sovereign immunity.”

Perluss acknowledged that the expansion of tribal commercial enterprises may
call into question the justification for the broad application of sovereign
immunity. But such policy judgments are left to Congress and not to the
state courts, he declared.

He went on to note that the “sue and be sued” clause in the Miami resolution
was specifically limited “to the extent of the specific terms of the
applicable contract or obligation,” and that the arbitration clauses in the
loan agreements were similarly limited to specific transactions and were not
broad waivers of sovereign immunity that would permit a consumer protection
action by the state.

The presiding justice did, however, take note of the department’s argument,
based on evidence it claimed to have discovered after the injunction was
issued, that the loan companies were actually independent of the tribes but
were involved in a “rent-a-tribe” scheme created solely to avoid complying
with the lending laws.

Such evidence, Perluss said, should properly be considered by the trial
judge in order to determine whether the companies are truly arms of the
tribe. Past Court of Appeal decisions, he noted, have established criteria
for resolving that issue, “including whether the tribe and the entities are
closely linked in governing structure and characteristics and whether
federal policies intended to promote Indian tribal autonomy are furthered by
extension of immunity to the business entity.”

The case is Ameriloan v. Superior Court (People), 08 S.O.S. 6711.