The Internet is becoming a place for criminal activity. In this case, it is the interest rates charged on loans to lower-income individuals and families.
So-called “payday loans” are a staple of storefront lender businesses all over the nation. Some states have banned them or limited the amount of interest they can charge.
The lenders are using the Internet to get around the state laws. Now, they are teaming up with American Indian tribes. The tribes are “sovereign states.” That means some federal and state laws do not apply to them.
New York and other states are taking the lenders on. State officials say the Indian tribes are just being used as “fronts”. The lender businesses usually are run nowhere near reservations. Therefore the companies cannot use tribal sovereignty as a defense.
The Attorney General of New York sued a lender named Western Sky. The company says it is within the boundaries of the Cheyenne River Sioux Reservation in South Dakota. It says state rules do not apply to them.
He said the lenders are illegal and deceptive. They are making high interest loans to consumers in New York. He said, “Western Sky preys upon New York consumers facing financial hardships with few options.”
The payday lenders are also going offshore to places like Belize, Malta and the West Indies. The reason is that foreign places offer “lawsuit protection and tax reduction.”
Many states are going after the lenders. In New York, the banks that reach into consumers’ accounts to pay the lenders are being asked to stop doing so.