How Natives Can Make E-Commerce Work for Them
Indian Country Today
American Indians have a long history of having to adjust to forced changes to their way of life. Recently, challenges have largely focused on their ability to provide for the needs of tribal members, many living in rural areas with few jobs, while maintaining the tribes’ status as independent nations recognized by the United States government. Instead of relying solely on casinos, tribes are seeking new ventures into reservation-based e-commerce, ventures that are drawing increased scrutiny from government regulators at every level.
A number of economists and sociologists predict this will have a chilling effect on economic development throughout Indian country. For example, in 2013, the United States Department of Justice launched a directive, now itself under investigation, called Operation Choke Point, to target banks who allowed “high-risk” businesses across 30 categories access to an established system that processed payments through participating banks. These businesses ranged from dating services to firearms dealers, and included tribal-owned businesses in online lending and online gaming. The Justice Department’s objective was to sever the relationship between banks and the companies on the federal target list.
As tribes looked for alternate sources of income, niche opportunities created by businesses shifting to the Internet became an increasingly appealing way to generate income. As participants reported at the recent Tribal Government E-Commerce Conference on the Gila River Indian Reservation near Phoenix, Arizona numerous tribes have found that economic success can be created online. Tribal leaders met in February to share their experience with other tribes interested in the economic and legal challenges of entering the market. Some tribes have moved toward online gaming, but others are benefitting from new relationships with e-commerce companies operated from reservations. Yet just as the economic outlook for American tribes seems to be improving, various government agencies are putting up regulatory roadblocks.
Connecticut regulators sued the Otoe-Missouria tribe and fined Chairman John Shotton $700,000, the first such action against a tribal leader. Shotton fired back with a lawsuit of his own. The tribe and Shotton have sued two current and former state bank regulators, accusing them of violating the tribes’ civil rights and sovereign status. Shotton said in his lawsuit that Connecticut’s actions prevent him from ensuring the financial security and well-being of tribal members and bar him from earning a living.
When the suit was filed, Shotton said in a press release, “The lawsuit I filed today in federal court is my response to the unprecedented, unwarranted, unconstitutional and unjustified attacks by these Connecticut banking regulators. The State of Connecticut, without allowing me to respond to the allegations against me, and without any semblance of due process, has issued a final judgment against me for $700,000. This is an example of the most egregious form of racial discrimination and this action is a direct violation of the civil rights afforded me under the Constitution of the United States and U.S. law.”
Kansas City could, in fact, wind up being the next battleground between Native Americans and the federal government. The Otoe-Missouria, Modoc, Miami, and Santee Sioux tribes, all with Kansas City operations, have found their e-commerce loan businesses challenged in the courts and criticized in the press. Multiple lawsuits have attacked their businesses for “breaking” laws. Initiators of these suits include states, the federal government, state attorneys general and class-action lawyers. Many have also begun to target partners of tribes, including a software company owned by race car driver Scott Tucker, as a way to attack the shield of tribal sovereignty. (Tucker previously was employed by the Miami Tribe of Oklahoma.) These legal maneuvers may have dire consequences for American Indians around the country, many of whom live on reservations created by the federal government where employment opportunities are scarce.
What is being challenged is the primary means for many tribes to remain successfully independent by using the Internet in legal ways while adjusting to the modern economic reality. Native Americans have been among the poorest groups in the United States since they were forcibly moved west by the U.S. government. Indeed, Blackfoot tribal member and private consultant Tom Rodgers notes that the Economic Research Service at the U.S. Department of Agriculture has reported that nearly 60 percent of all Native Americans who live outside of metropolitan areas inhabit persistently poor counties. “Contrary to popular belief,” Rodgers found, “the overwhelming majority of tribes are not wealthy by virtue of gaming. This is mostly attributable to a fact which all sovereign nations have come to understand — that geography is all too often destiny.”
The revenues generated by Indian gaming have been limited to a select number of tribes located near large population centers. E-commerce offers opportunities for remote tribes. But for struggling tribes to capitalize on e-commerce, it often takes outside investment get a business off the ground. Outside investors, in turn, will grow wary of such investments or partnerships if sovereign immunity does not offer protection from every state regulator with its own unique enforcement agenda.
Many Indian leaders see further regulation as another means to keep tribes in poverty. Karrie Wichtman, a tribal lawyer to the Lac Vieux Desert band of the Lake Superior Chippewa Indians, told the Washington Post, “Anytime Indian country enters into something new, it’s a fight, because they think we should stay on the reservation.”
Lance Gumbs, member of the Shinnecock Nation of New York and executive director of the Native American Financial Services Association agreed, “E-commerce represents the future for tribal economic development.”
Once again, the Otoe-Missouria tribe and its chairman Shotton, living on mostly arid reservation lands in Oklahoma, find themselves under siege by government regulators simply for trying to become less dependent on casino income. Indians, including the Otoe-Missouria tribe, whose online lending operations I personally visited, are simply setting up Internet versions of lending businesses that non-native Americans operate with impunity from storefronts in almost every American city. The Internet provides vast opportunities for people in isolated areas around the world to engage in e-commerce. When will America’s first citizens stop being treated as second-class citizens for trying to build viable, legal businesses on the Internet?