Tribes Lose Battle to Shield Payday Sites From New York State Crackdown

October 2, 2013
New York Times  
payday lending news

A federal judge in Manhattan ruled on Sept. 30 that online lending businesses operated by Native American tribes forfeit their rights as sovereign nations when they use the Internet to reach customers outside of reservations. The Otoe Missouria Tribe of Oklahoma and the Lac Vieux Desert Band of Lake Superior Chippewa Indians in Michigan had sought to fend off regulatory overtures from New York State's superintendent of the Department of Financial Services, Benjamin Lawsky.

Judge Richard Sullivan of Federal District Court, however, sided with Lawsky's stance that the activity targeted for regulation is occurring in the state and not under tribal sovereignty. "These consumers are not on a reservation when they apply for a loan, agree to the loan, spend loan proceeds or repay those proceeds with interest," he remarked. "These consumers have not, in any legally meaningful sense, traveled to tribal land."

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