Connecticut law caps interest rates at 12%. But Great Plains Lending, affiliated with a Native American tribe in Oklahoma, is hawking payday loans by web and mail with rates of 200-400%, according to WTNH.com, reporting from Hartford, Conn. In response, the Connecticut legislature is crafting legislation to prevent residents from being held liable for more than 12%.
This appears to be a promising response to the problem of "rent-a-tribe" payday loans, where lenders operate on tribal land in an effort to avoid state rate caps. If states can't regulate lenders because of tribal sovereignty, they can at least limit what their own residents must pay.
The story is here.
Payday loans are a much larger problem than you would think. With the advent of the Internet, spam email and a troubled economy, many people fall into the payday loan trap. I have had clients with much higher interest rates than 400%; in one case the interest rate was 1570%. These companies operate on more than Indian reservations, many are located offshore and do not recognize the laws of the U.S. We need to not only restrict what Connecticut residents pay, but close the doors to our courts for any collector trying to enforce such an onerous agreement.
Posted by: Gene Melchionne | Tuesday, April 21, 2015 at 06:19 PM