Payday lender sued in class action for improperly using sovereign status of Sioux Tribe

Posted on: August 21st, 2013 by Steve Larson
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FeeA class action lawsuit was filed against lenders Payday Financial LLC, and Western Sky, LLP for shielding their illegal lending activities by improperly using the sovereign status of the Cheyenne River Sioux Tribe.  The lawsuit was filed in the U.S. District Court for the Central District of South Dakota on behalf of a nationwide class of plaintiffs along with sub-classes for the states of Minnesota, Texas, and Virginia.  The complaint also names Martin “Butch” Webb, owner and president of Payday Financial, and CashCall, an entity that funded the illegal lending, as defendants. 

From at least as early as 2007, defendants offered consumer loans ranging between $300 to $10,000 through Internet websites at APRs between 89.68 % and 342.86 %.  The usury limits are 8 percent in Minnesota and Virginia and 10 percent in Texas. 

A member of the Cheyenne River Sioux Tribe, Webb established his business on the reservation in Timber Lake and claims that the tribe has exclusive jurisdiction over the loan contracts. 

In 2011, the Federal Trade Commission (FTC) filed a complaint accusing Payday for illegally attempting to garnish wages of borrowers and disclosing consumers’ supposed debts to their employers.