A federal appeals court in New York yesterday cleared the way for consumer advocates to sue for injunctions barring officers of Native American tribes from engaging in alleged predatory-lending practices, WSJ Pro Bankruptcy reported. The decision came in the case of Think Finance Inc., an alleged payday lender that resorted to bankruptcy after being sued over “rent-a-tribe,” practices, in which an otherwise illegal business uses a Native American tribe as a front. Defenders of the practice say that U.S. and state laws don’t apply to tribes due to their sovereign national status. Consumer advocates say the tribes aren’t really doing the lending, and they also aren’t getting much of the money generated by high-interest-rate loans sold to consumers online. Wednesday’s appellate court ruling said that Native American tribal sovereign immunity doesn’t provide a shield against laws designed to protect consumers against predatory lending practices. Read more.
A forthcoming podcast between ABI Editor-at-Large Bill Rochelle and Prof. Jack Williams examines some of the issues related to tribal sovereignty and bankruptcy.
