Welcome to The Times in Plain English   Click to listen highlighted text! Welcome to The Times in Plain English

Indian Tribes Going into Payday Loan Business

May 13, 2013
Plain English Version

Payday loans, like loans secured by auto titles, have the highest interest rate charges around. Only people  needing money to pay for essentials such as rent and utility bills take out such loans. Many states have banned them.

To get around the ban, payday loan companies have taken to the Internet to push their high-interest loans. The federal government is trying to stop them from using it.

The lenders are now encouraging Indian tribes to go into the payday loan business. Tribes have what is called “sovereign immunity.” This means states cannot regulate them and the federal government can only try.

The big banks, such as the Bank of America, are part of the payday loan system. Money from payday lenders is deposited in borrowers checking accounts. Then the banks charge them for late fees, overdrafts and even using their bank cards.

It is sometimes hard for borrowers to close their accounts and pay off their debts. Under pressure, some banks are starting to get out of the business.

Some tribes are starting their own payday loans businesses. Some are working with existing payday loan companies. According to a consumer advocate, “This is a new way for the [payday] loan industry to get out from under state laws.”

Tribal lenders and other payday lenders charge interest rates as high as 600 percent annually.

There are now are 16 tribes in the business, with a new one coming in nearly every month. A spokesman for tribes said, “Tribal lending is a financial lifeline for many tribes.” He said payday loans may be the best way of bringing in much-needed revenue.

Are the tribes are acting on their own or as fronts for lending companies? A spokesman said tribes may work with outside groups just as some Indian casinos use outside managers.

So far, the courts say tribes are immune from many state and local laws. Frustrated federal officials are promising to find ways to regulate tribal payday lending.

Source: The Los Angeles Times

Print Friendly

In Brief

How Does Exercise Fight Depression?

Experts say even mild stress can lead to depression. 

Scientists also say that exercise is a cushion against depression. Working out makes...

Teen Lungs Healthier When Air Pollution Drops

Most of the time when people resist the idea that climate matters, it is because doing something about it would cost money.

Advocates say a...

Slow Down on that Heartburn Drug

A new study adds to the findings that taking heartburn drugs creates risks.

The study says that some drugs can lead to a heart...

New Ways to Think About Treating ADHD

New studies show many people with ADHD are drawn to new and exciting experiences. They can be very impatient and restless with routine activities.



  • dictionary
  • English Dictionary

Double click on any word on the page or type a word:

Powered by DictionaryBox.com
Click to listen highlighted text!