Tribe Payday Loans & Arbitration Agreements

It’s been legally established that federally recognized Native American Indian Tribes funding payday loans are entitled to their own laws and legal systems and generally don’t necessarily have to follow state or even federal laws. [There are exceptions such as TILA…]

The payday loan lender Cheyenne River Sioux stipulate in their loan contract:

“According to the contract, any dispute connected to loan collection would have to be submitted to an arbitration conducted by the tribe or an authorized representative in accordance with the tribe’s consumer dispute rules.”  Another provision said that, “At the borrower’s choice, the American Arbitration Association or Judicial Arbitration and Mediation Services could administer the arbitration.”

However, some courts have determined that the Cheyenne River Sioux did not create, nor employ, a consumer arbitration process nor have anyone assigned to perform these arbitrations.


Fourth District Judge Harvie Wilkinson reversed a previous court’s decision regarding Western Sky and Martin Webb. Payday loan lenders DO NOT WANT TO BE SUED in a class action. Typically, payday loan lenders insist payday loan borrowers to sign a contract that basically states they can’t bring one. Over the years, the Supreme Court has upheld such clauses. Legal opinions recognize that this agreement can result in “effectively vindicating” federal rights. So long as some remedy exists for a borrower, the courts have upheld this view.

Per Wilkinson’s, it would appear that any contract that rejects the application of federal law can’t be enforced. I take this to mean this decision maylikely reduce federally recognized Native Amenrican Indian tribes’ sovereignty rights.

We shall see. Here’s a link to the Court’s decision: Martin Webb-Delbert Services-Western Sky

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