Payday lending firms in two of the Oklahoma Indian tribes have agreed to make settlements with FTC on following ethical guidelines for debt recollection. The tribes that have agreed to the settlements with FTC are Miami and Modoc, both based in Oklahoma. Under the terms of agreement they have signed with the FTC, the payday lending companies owned by these two tribes would refrain from using aggressive debt collection techniques including harassment and threatening with arrest and lawsuit.
Moreover, these tribes have also agreed that their payday lending companies won’t ask borrowers for automatic drafts from their bank accounts to qualify for the loans. These terms of agreement between the FTC and these tribes were approved by a Nevada-based District Court judge. Both these tribes in Miami have several payday lending companies under their ownership. In 2012, both these tribes and their payday lending companies were sued by the federal government under allegations of deceptive trade practices.
It is assumed to be a common practice undertaken by payday lending companies to form allegiances with American Indian tribes. Since these tribes think they are exempted from state laws, these companies also claim exemption from the debt collection laws applicable in the states. In fact, many of these companies are owned by individuals who don’t belong to these tribes but merely pay a part of profit to the tribes for their “partnership”. In case of the payday lending companies owned by these two tribes, FTC claims that they are actually owned by a race car driver named Scott Tucker.
The Oklahoma Department of Consumer Credit is responsible for regulating the payday lenders operating in the state but they have no control over the tribe-owned firms. Both the tribes have sovereign status and are exempted from state laws. The companies in these tribes operate online, providing consumers with payday loans using online transactions. The consumers have repeatedly filed complaints about these companies with the regulatory department of the state but legal action not been taken due to the sovereign status of both these tribes.
Most of the complaints were regarding the debt recollection practices these companies indulge in and the hidden debt fees they charge from their consumers. An online payday lending company, AmeriLoan.com owned by the Miami tribe was allegedly drafting the bank accounts of borrowers repeatedly for monthly payments without the consumers’ knowledge even when the payment wasn’t due and also when the loan was already paid off.
With the settlement agreement now signed between the tribes and the FTC, consumers can now expect to receive more ethical treatment when it comes to debt recollection. The consumers are also repeatedly advised to be more careful when dealing with online payday lending firms, ensuring that payday lending is legal in their state and the firm they are borrowing from is regulated by state authorities. Companies offer payday loans acting as matching agents between regulated companies and borrowers so that safe lending practices can be followed. Consumers should only borrow payday loans from regulated firms to stay safe from falling victim to any debt traps.