Tribal Lending and Tribal Sovereignty

The short-term lending industry involves millions of consumers and billions of dollars. Several Indian tribes have entered the lending industry as a means of economic development. These tribes have created their own lending enterprises that are headquartered in Indian country but attract customers from around the United States via the internet. This practice has been highly controversial.

Tribal lending has generated issues in a myriad of court cases. The issues are largely repetitive: Is the tribal lender entitled to sovereign immunity? And does the tribal court have jurisdiction over the loan involving a non-Indian? Courts have struggled to answer these questions. This Article answers both questions in the affirmative.

This Article begins by introducing tribal online lending. Part II provides an overview of the short-term lending industry. Part III discusses how and why tribes entered the online lending industry. Part IV examines the primary legal issues in tribal lending—sovereign immunity and tribal court jurisdiction. Part V recommends Congress pass legislation to resolve the tribal lending controversy. Specifically, the Article suggests that Congress declare that tribal courts have jurisdiction over loans involving non-Indian borrowers. The Article also suggests that Congress codify a test to determine which tribal lenders qualify for sovereign immunity.