Alert September 03, 2013

Lenders Pushback on New York’s Efforts to Curb Payday Lending

Members of tribal nations filed a complaint in the United States District Court for the Southern District of New York against the New York State Department of Financial Services in response to the its attempt to shut down online lending businesses owned by the tribal nations. Plaintiffs argue that the DFS’ cease and desist demands along with letters sent to third parties the tribal businesses contract with, including banks, describing their business as illegal payday lenders, violate the tribal nations’ sovereignty in violation of federal law. The complaint seeks an injunction to prohibit DFS from regulating the tribal businesses as well a declaratory judgment stating that the tribal businesses are sovereign nations, which DFS may not regulate.