Native Americans are taking a stand on behalf of tribal lenders amid an onslaught from special interest organizations attempting to push these local businesses that serve an often neglected community out of business. One Native American advocacy group says opponents of tribal lending are promoting a “false, and often racist narrative.”
For years, the National Consumer Law Center (NCLC), a self-declared watchdog organization with no legal authority, has been waging a public-relations war on tribal lenders, accusing them of being engaged in unethical “payday lending” and demanding they operate under non-tribal rules.
“None of my tribes are engaging in payday lending,” says Robert Rosette, an attorney that exclusively represents Indian Tribes. “They always get upset with that sort of negative connotation.”
And it appears the courts are on their side.
“We took that all the way to the Connecticut Supreme Court where we prevailed,” says Rosette. “We also got a significant victory two years ago in the 4th Circuit, so we’ve got two significant victories now in the federal courts and in the Connecticut Supreme Court.”
According to Rosette, it is an issue of sovereignty. So, for example, there are federal laws, state laws, and tribal laws. The laws that tribal lenders follow are federal laws. That’s because of the supremacy clause, meaning federal law trumps other laws.
“If you look at every federal lending law, and every tribal lending law, and every tribal lending code, the tribes comply with all of these applicable federal and tribal lending laws,” says Rosette. “It’s not that tribes don’t comply with state law, it’s that those laws are not applicable to tribes.”
Meanwhile, the NCLC is pushing against these rulings, using its widely-read online digital library to promote legal theories contrary to these recent rulings. Their website is full of references to “faux tribal lending” and legally dubious claims that tribal sovereign immunity is in question in these cases.
Native American Financial Services Association (NAFSA) chalks it up to a lack of education on these matters.
“We are keenly aware of the lack of education that exists for much of mainstream America regarding Tribal financial services,” the Native American Financial Services Association (NAFSA) in a statement. “As such, we are continuing to work to better educate the public, consumer groups, politicians and lawmakers in order to counteract the false, and often racist narrative and stigma that has been unjustly plaguing Tribal financial services and Fintechs.
“Above all, NAFSA remains steadfast in its advocacy for Tribes and their inherent rights as sovereign nations to self-determine what is best for themselves and future generations of indigenous people,” they said.
Fintech refers to computer programs and other technology used to support or enable banking and financial services.
Tribal lenders do offer short-term installment loans with higher interest rates that reflect higher risk, but they are not tied to a person’s payday.
“That’s an entirely different business that we disagree with and my clients prohibit that type of activity,” says Rosette. “These are installment loans with amortization periods, and the borrowers have the right and opportunity to pre-pay them much like a credit card, and I think most of our clients pay them off within anywhere from one to three months, so, I just want to make that clear that none of my tribal clients engage in payday lending.”
Rosette says it’s “demoralizing for tribes to get beaten up by mainstream media.”
“Nobody takes the time to look at how hard tribes work at these businesses, how good they treat their customers, and most importantly what the tribes do with the revenue they’re derived from these companies,” says Rosette. “The tribes are using these badly-needed revenues to provide essential government services to their constituents, such as buying dialysis machines to treat diabetes or purchasing police cars or maybe using some of the money to send their kids to college.
“It’s very disheartening and demoralizing but the tribes are resolved to continue operating these businesses, offering better products, and continuing to be a market leader in the financial services space,” Rosette said.
