Native Americans Strike Back Against Tribal Moneylenders

Native Americans are taking a stand on behalf of tribal moneylenders amid an attack from special interest organizations trying to put local businesses that serve an often neglected community out of business. A Native American advocacy group says opponents of tribal borrowing are promoting a “false and often racist narrative.”

For years, the National Consumer Law Center, a self-declared watchdog organization without legal authority, has been waging a public relations war against tribal lenders, accusing them of engaging in unethical “payday loans” and demanding that they operate under rules. tribal.

“None of my tribes participate in payday loans,” said Robert Rosette, an attorney who exclusively represents Indian tribes. “They always bother with that kind of negative connotation.”

And it seems that the courts are on their side.

The state of Connecticut tried to fine the Otoe-Missouria Tribe President John R. Shotton and his tribal lenders for violating state rules on interest rates for short-term loans. The NCLC supported the effort. They were unsuccessful.

“We took that all the way to the Connecticut Supreme Court, where we prevailed,” Rosette said. “We also had a significant victory two years ago in the 4th Circuit, so now we have two significant victories in the federal courts and in the Connecticut Supreme Court.”

According to Rosette, it is a question of sovereignty. So, for example, there are federal, state, and tribal laws. The laws that tribal lenders follow are federal laws. That’s because of the supremacy clause, which means that federal law takes precedence over other laws.

“If you look at all federal loan laws and all tribal loan laws and all tribal loan codes, tribes comply with all of these applicable federal and tribal loan laws,” Rosette said. “It’s not that tribes don’t comply with state law, it’s that those laws don’t apply to tribes.”

Meanwhile, the NCLC is lobbying against these rulings, using its widely read online digital library to promote legal theories contrary to these recent rulings. Their website is littered with references to “bogus tribal loans” and legally dubious claims that tribal sovereign immunity is in question in these cases.

The Native American Financial Services Association attributes this to a lack of education on these issues.

“We are well aware of the lack of education that exists in much of the mainstream in America regarding tribal financial services,” the Native American Financial Services Association wrote in a statement. “As such, we continue to work to better educate the public, consumer groups, politicians and legislators in order to counter the false and often racist narrative and stigma that have unfairly plagued tribal financial services and Fintechs.

“Above all, NAFSA stands firm in its defense of tribes and their inherent rights as sovereign nations to self-determine what is best for themselves and future generations of indigenous peoples,” they said.

Fintech refers to computer programs and other technologies used to support or enable banking and financial services.

Tribal lenders offer short-term installment loans with higher interest rates that reflect higher risk, but are not tied to a person’s payday.

“This is a completely different business that we do not agree with and my clients prohibit this type of activity,” Rosette said. “These are installment loans with repayment periods, and borrowers have the right and the opportunity to prepay them like a credit card, and I think most of our clients pay them off within one to three months as well. I just want to make that clear that none of my tribal clients are in payday loans. “

Rosette says it is “demoralizing that the tribes are beaten by the media.”

“Nobody takes the time to see how hard the tribes work in these businesses, how well they treat their customers, and most importantly, what the tribes do with the income they have earned from these businesses,” Rosette said. . “Tribes are using this much-needed revenue to provide essential government services to their constituents, like buying dialysis machines to treat diabetes or buying police cars or perhaps using some of the money to send their children to college.”

Chris Woodward writes about industry and technology for InsideSources.

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