"The fact the tribe supposedly owns the company is not the problem. It's the business practices," Rick Brinkley of the BBB told Newson6.com.
The payday-loan business has created numerous jobs on the Modoc Reservation in Miami, Oklahoma, Bill Follis, the chief of the Modoc tribe since 1974, told The Wall Street Journal in an article published on February 10, 2011. "We don't want to brag," Follis, a former loan officer at a bank, said last year. "But it's good."
The April 2 lawsuit in U.S. District Court in Nevada is the second in seven months filed by the FTC against a payday lender that has used sovereign immunity as a defense against legal action by state authorities. The most recent lawsuit alleges the payday lending services misrepresented and inflated fees, and violated legal lending practices stipulated by the Federal Trade Commission Act. The lawsuit is against a "web of defendants, including AMG Services, Inc., three other Internet-based lending companies, seven related companies, and six individuals," an FTC press release states.
"According to the FTC, the defendants also violated the Truth in Lending Act by failing to accurately disclose the annual percentage rate and other loan terms; and violated the Electronic Fund Transfer Act by illegally requiring consumers to preauthorize electronic fund transfers from their accounts," the release states.
In previous cases against tribal payday loan operations, the judge has sided with the Indian Nations. On February 13, the District Court from the Colorado Supreme Court ruled in favor of the Miami Tribe of Oklahoma and the Santee Sioux Nation, which operates SFS Inc., that they are exempt from government oversight. “The Miami and Santee people are the ones we must trust, as long as Congress lets us trust them, to know what kinds of business relationships are in their best interests,” District Court Judge Morris B. Hoffman said, reported Indian Country Today Media Network in the February 15 article Tribes' Payday Loan Operations Upheld. “They do not need the guidance of the State of Colorado, through either its law enforcement officials or its courts.”
Barry Brandon, executive director of the Native American Fair Commerce Coalition, supported the Colorado decision, reported NewsOK.com. “The court got it right,” he said in March. The tribes are not Coalition members.
The FTC has requested the court order an immediate injunction on payday loans while the agency pursues its case against the defendants.