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Attorney General Josh Stein Fights Payday Lending

Release date: 12/28/2018

(RALEIGH) Attorney General Josh Stein today filed an amicus brief to oppose payday lenders’ use of Indian tribes to skirt state laws that protect people from exorbitant interest rates and other predatory practices. In these schemes, unscrupulous lenders make payments to a tribe to “borrow” its immunity. Attorney General Stein argues that the lender should bear the burden of proving that it is a legitimate arm of the Indian tribe through which it claims immunity.

“We have successfully driven out of North Carolina the payday lenders charging loan shark interest rates on working people,” said Attorney General Josh Stein. “I will not allow them to come back in on a technicality. By filing this brief, I am continuing my work to protect people from illegal unfair, high priced loans.”

Attorney General Stein and 14 other attorneys general filed this friend-of-the-court brief in Williams v. Big Picture Loans, LLC. The lawsuit was filed by a group of consumers who sued the Michigan-based payday lender. Big Picture Loans argued that it was entitled to immunity from state laws preventing exorbitant interest rates because it was acting as an arm of a federally recognized Indian tribe and was thus entitled to what is known in the law as “sovereign immunity.” This immunity would prevent enforcement of state consumer protection laws and could potentially even prevent state investigations into the lender’s activities.

As a result of stricter state laws, many payday lenders have turned to the Internet to make loans to consumers across the country, contracting with federally recognized Indian tribes to skirt state usury caps.

Earlier this year, a federal district court in Virginia ruled in favor of the consumers in Big Picture, asserting that the burden was on the lender to prove that it was an arm of the tribe entitled to immunity from state law. In the 4th Circuit, a victory against Big Picture Loans would help stop payday lenders from preying on consumers across the country. Attorney General Stein was joined in the brief by state attorneys general from the District of Columbia, Connecticut, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Pennsylvania, Vermont, and Virginia. For a copy of the brief, click here.

Laura Brewer (919) 716-6484

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