CFPB Dispute with Tribe-Affiliated Lender Spills into Court

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After denying a petition to set aside a civil investigative demand (see October 1, 2013 Alert), the CFPB, filed a petition in the United States District Court for the Central District of California to enforce its civil investigative demand against online payday lenders affiliated with Indian tribes. In its petition, the CFPB alleged that the lenders failed to comply with the civil investigative demand and requested that the court issue a show cause order and an order requiring the lenders to comply. The lenders filed their opposition arguing that the CFPB’s petition “barely mentions the key fact of [the] case” that the lenders were “arms of a sovereign Indian Tribe, vested with all attributes of tribal sovereignty.” The lenders continue to advance the argument that they are outside the CFPB’s jurisdiction because they are chartered under the laws of federally recognized Indian tribes (see October 2, 2012 Alert). Lenders affiliated with tribes have made similar arguments when facing oversight and enforcement action by regulators (see April 1, 2014 Alert).

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Topics:  CFPB, Internet Lenders, Payday Loans, Tribal Loans

Published In: Civil Procedure Updates, Consumer Protection Updates, Finance & Banking Updates, Indigenous Peoples Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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