Ninth Circuit orders tribal payday lenders to comply with CFPB investigations

CFPB tribal civil investigative demands On January 20, the Ninth Circuit affirmed a district court decision in CFPB v. Great Plains Lending that compelled three tribal lending entities to comply with civil investigative demands (CID) issued by the CFPB.

The tribal entities are for-profit small-dollar online lending companies created by three separate tribes (Tribes). The CFPB launched an investigation into those entities to determine whether they had violated federal consumer financial laws. More specifically, the CFPB was concerned that the entities had engaged in unlawful practices in violation of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act (CFPA), the Truth in Lending Act (TILA), the Electronic Funds Transfer Act (EFTA), and the Gramm-Leach Bliley Act (GLBA). 

During the course of its investigation, the CFPB served several civil investigative demands on the tribal entities. The Tribes instructed the tribal lending entities not to respond to the CIDs on grounds of tribal sovereign immunity.

The CFPB responded by seeking an order from the US District Court for the Central District of California compelling a response. The court granted the request.

The tribal lending entities appealed the ruling to the Ninth Circuit, arguing that the CFPB’s enforcement authority did not extend to them. The Ninth Circuit, however, affirmed the district court’s order. The court reasoned that when Congress created the CFPA, which authorized the creation of the CFPB, it did not expressly excluded the tribes from the Bureau’s enforcement authority. The court concluded that the district court properly determined that “the Bureau did not plainly lack jurisdiction to issue investigative demands to the tribal corporate entities.”

Tags: CFPB, Payday Loans, Tribal Immunity

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