A temporary standoff has been reached between Connecticut banking regulators and an Oklahoma tribe pressing to pitch their ultra-high-interest online “payday loan” services to state residents.
A Connecticut judge recently handed the state a minor win by keeping in place $1.5 million in fines and penalties against a pair of tribal entities — Great Plains Lending LLC and Clear Creek Lending — and the tribe’s chairman, John R. Shotton.
However, the tribes could claim a tiny victory, too, after the same judge also ordered that the state cannot enforce its ruling against the co-defendants nor take measures to collect the fines, pending outcome of the tribe’s court appeal.
The legal wrangling started in October when the Connecticut Banking Department issued a cease and desist order and fined the tribe for violating the state’s usury law, which prohibits anyone from making loans at more than 12 percent interest without a license, effectively banning payday lenders from operating in this state.
The tribe challenged the ruling, arguing that “tribal sovereignty” allows them to grant loans in Connecticut for less than $15,000 with interest of 200 percent to 450 percent, even though such lines of credit violate state law.
They claim Connecticut’s and other states’ consumer-protection laws cannot bar it from pursuing enterprises that generate income and jobs for tribal members.
The Banking Department on Jan. 6 upheld its ruling. A few weeks later, the tribe and its chairman filed an administrative appeal in New Britain Superior Court, simultaneously asking for a temporary injunction. The state also pressed for a dismissal.
Both parties now await a hearing date to be set.
— Gregory Seay