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California Supreme Court Is Right To Rule Against Payday Lenders Claiming Tribal Sovereignty

Tuesday, January 3, 2017

The California Supreme Court recently ruled against payday lenders who try to use tribal sovereignty to avoid state licensing and consumer protection laws.

In 2007, the California Department of Business Oversight (DBO)—then called the Department of Corporations—filed a suit alleging that private payday lenders such as Ameriloan and OneClickCash, each affiliated with the Miami Nation of Oklahoma or the Nebraska-based Santee Sioux Nation, had violated the law by lending without state licenses and charging excessive fees.

The payday lenders had previously won lower court rulings before the case made its way to the state supreme court. The court used a criteria that determined these businesses, "are not entitled to tribal immunity based on the record before us."

Center for Responsible Lending (CRL) California Policy Director Graciela Aponte-Diaz released the following statement:

We are thankful for the Department's continued use of its authority to protect Californians from abusive lending practices. This is an important ruling which again affirms that payday lenders cannot inappropriately use tribal sovereign immunity to avoid adhering to state laws.

We've already seen the harm the payday lenders cause to hardworking families, such as bank penalty fees and delinquencies on bills. Payday lenders drain billions of dollars in fees every year nationally and often targets communities of color and low-wealth families, including members of Native American tribes.

The California Supreme Court is right to rule against this payday lending scheme. CRL will continue to push for policies that prevent predatory lending practices and advance the rights of states to aggressively enforce their laws.

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Ricardo Quinto at