Payday lenders are trying to stay in business and overreaching state regulations by means of turning to Indian tribes as they are legally protected by a particular doctrine called sovereign immunity that actually exempts the tribes from some federal and state laws. This move is determined by the fact that states started a number of regulations to shift payday lenders out of business, though, consumer demand is established well.
Strict Regulation Makes Payday Lenders Search For The Legal Shelter
Well, it’s difficult for payday lenders to keep their doors open for consumers as they became the subject of increased regulation of the industry. Therefore, some lenders start to build their business partnerships with Indian tribes. According to Wall Street Journal, the main purpose of such deal is to get the opportunity for overreaching strict regulation of payday lending industry. Sovereign immunity is a legal doctrine that protects Indian tribes and exempts from some lawsuits and regulations. All payday loan lenders need to provide cash advance loans on tribal lands is to make an agreement with particular tribe and incorporate their business on the land belonging to the tribe.
Benefits Of Sovereign Immunity
In fact, an entity with the sovereign immunity protection is guarded from lawsuit or prosecution, though, the immunity extent may vary. Thus, businesses which are incorporated on the lands of the Native American reservations and tribes, being considered nations unto themselves, can’t be the subject to the state laws. The lender of no credit check payday loans, for example, incorporates the business on the land of reservation situated in Arizona, though, there are no offices on the tribe belonging to the lender. Anyway, the sovereign immunity exempts the payday loan company from obligations of complying with Arizona law concerning small short term loans, even though, the lender is not located on the land of the tribe, but only incorporates on it.
Actually, payday loan industry represents over $10 billion in the whole US economy and the similar businesses existed before the Statue of Liberty was built. However, payday loans are aimed to be regulated out of business by many people, even though, the demand for this lending service is established well enough.