By: Javi Calderon
West Virginia Attorney General Subpoenas Native AmericanPayday Lender
A South Dakota-based payday loan lender has been ordered to cease making loans and/ or collecting on loans in West Virginia until it complies with the investigative subpoena ordered by state Attorney General Darrell McGraw.
McGraw, who last year sued 8 payday loan lenders and has taken over 100 lenders to court since 2005, has become West Virginia’s financial protection watchdog, recovering over $2.5 million from ill-gotten loans for the citizens of the poorest state in the nation.
West Virginia has a strict 18% APR cap on interest rates for cash advance loans, which McGraw strictly polices. Many West Virginians still get payday loans through online lenders based in other states.
In the case of Payday Financial, McGraw sent them a subpoena over a year ago, after receiving several complains from his continuants. Owner Martin Webb, however, refused to comply. Webb, a member of the Cheyenne River Sioux Tribe, argued that he and Payday Financial have tribal immunity. Kanawha County Circuit Judge Louis Bloom wasn’t buying it, and on October 24th ruled that Payday Financial must stop doing business in West Virginia until they comply.
In order for a company to receive tribal immunity it must conduct business on the reservation and the profits must go towards the benefit of the whole tribe. Bloom ruled that Payday Financial was organized under the laws of South Dakota, not the reservation, that the transactions were being made in West Virginia, and that Martin Webb was the only person profiting from the company.
West Virginia is not the first state to go after Webb for his online lending schemes. Colorado, Missouri and Maryland have also taken action against Payday Financial.
According to the Center for Public Integrity, more and more payday advance lenders are attempting to claim or align themselves with native American tribes for the benefits.
