Online payday loan peddlers apparently skirting the law by setting up shop on reservations

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The Consumerist (Yonkers, New York)
By:  Mary Beth Quirk
November 5, 2012

When someone wants your money, they'll go to quite sneaky lengths to get your business. That's what one Oregon senator says online loan sharks are doing, by opening on Native American reservations so as to get around state and federal consumer protection laws. State laws don't work on tribal lands, a situation which has turned such lands into veritable havens for payday lenders trying to skirt regulation.

Senator Jeff Merkley tells KATU he's been trying to crack down on those organizations for a while now.

"What they're doing is morally wrong," Merkley said. "It breaks state law. It destroys families and we have to stop it."

Loan companies are often sending customers to collections and charging triple-digit interest rates and harassing them over the phone. But under Oregon and federal law, nothing can be done if the companies operate on reservations, where tribal sovereignty is the law of the land.

Merkley tried to stop payday lenders from nefarious dealings by pushing a law through in 2007 that limits interest and fees that can be charged, and outlawed collections on any loans done over the Internet. Once those lenders moved to tribal lands, everything changed.

The senator is now pushing Congress to change federal law, which could be a hard fight as treaties involving some tribal lands have existed for decades.

"It simply says that you can't operate out of a tribal reservation or overseas, or anywhere else, and violate the state laws," Merkley said of his bill, which would enable the Consumer Fraud Protection Bureau to stop loan sharks.

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