CFSA Payday Lenders Respond to WSJ, Forbid Tribal Partnerships
American Indian tribes own more than a dozen payday lenders employed through AMG Capital Services Inc., according to the Wall Street Journal. Averaging approximately $400, they are secured by the borrower's next paycheck, the Journal states.
In retaliation to the Journal's article "Payday Lenders Join with Indian Tribes," the national organization that regulates payday advance, Community Financial Services Association of America (CFSA), released a statement renouncing companies that partner with Indian tribes for the purpose of circumventing state licensing procedures and payday lending regulations.
“Partnering with a Native American tribe to avoid state licensing requirements for short-term lending defies CFSA Best Practices and would lead to the automatic expulsion of a company in violation,” said D. Lynn DeVault, Board Chair of the CFSA, in a press release.
He called company-tribal partnerships "a group of internet-based lenders who choose not to license themselves in the states in which they operate," since tribes hold "sovereign immunity" from payday lending regulations.
"CFSA member companies, however, will continue to hold themselves accountable to the states and will not be involved in this practice," DeVault said. “Our Best Practices require that all our member companies be licensed in the state where the customer resides and that they comply with all applicable state laws."