Native Americans take a stand on behalf of tribal lenders amid an attack by interest groups trying to put local businesses that serve an often neglected community out of business. A Native American advocacy group says opponents of tribal credit promote a “false and often racist narrative.”
For years the National Consumer Law Center, a self-appointed oversight organization with no legal powers, has been waging a public relations war against tribal lenders, accusing them of unethical “payday loans” and telling them to comply with non-tribal rules.
“None of my tribes do payday loans,” said Robert Rosette, an attorney who only represents Native American tribes. “You always get annoyed with that kind of negative connotation.”
And it seems that the courts are on their side.
The state of Connecticut tried to punish Otoe Missouria tribe chairman John R. Shotton and its tribal lenders for violating state rules on short-term loan interest rates. The NCLC supported the effort. They were unsuccessful.
“We took this to the Connecticut Supreme Court, where we prevailed,” said Rosette. “We also had a major victory in the 4th District two years ago, so we now have two major victories in the federal courts and the Connecticut Supreme Court.”
According to Rosette, it’s a question of sovereignty. For example, there are federal, state, and tribal laws. The laws that tribal lenders obey are federal laws. That’s because of the precedence clause, which means that federal law trumps other laws.
“If you look at every federal lending law and every tribal credit law and code of credit, the tribes adhere to all of these federal and tribal credit laws in force,” Rosette said. “It’s not that tribes don’t obey state laws, it’s that those laws don’t apply to tribes.”
Meanwhile, the NCLC is pushing against these judgments and using its widely available online digital library to promote legal theories that contradict these recent judgments. Their website is full of references to “false tribal credits” and legally dubious claims that these cases call tribal state immunity into question.
The Native American Financial Services Association attributes this to a lack of education on these matters.
“We are well aware of the lack of education that exists in much of the American mainstream 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 lawmakers to counter the false and often racist narrative and stigma that unfairly haunts tribal financial services and fintechs.
“Most importantly, NAFSA stands firm in its advocacy for tribes and their inherent rights as sovereign nations to 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 they are not tied to a person’s payday.
“This is a whole different business that we disagree with and my clients prohibit this type of activity,” said Rosette. “These are installment loans with payback periods, and borrowers have the right and ability to prepay them much like a credit card, and I think most of our customers pay them off within one to three months. I want to make it clear that none of my regular customers operates payday loans. “
Rosette says it is “demoralizing for tribes to be beaten up by the mainstream media”.
“Nobody takes the time to see how hard the tribes work at these companies, how well they treat their customers, and most importantly, what the tribes do with the income they make from these companies,” said Rosette. “The tribes are using this much-needed revenue to provide vital government services to their constituents, such as buying dialysis machines to treat diabetes or buying police cars, or possibly some of the money to send their children to college.”
Chris Woodward writes about industry and technology for InsideSources.