Fort Lauderdale, FL (PressExposure) April 18, 2012 -- A simple search on Google reveals that the payday loan business is thriving notwithstanding the poor economy. Florida Statute § 682.01 provides that any loan that charges more than 18% per annum is usurious. The same statute provides that it is a criminal offense for an individual or corporation to charge more than 25% interest per annum. Notwithstanding the clear and unambiguous laws, many of the payday loan websites are flagrantly advertising loans to Florida consumers that carry crippling rates of interest far in excess of Florida's criminal usury rate.
Florida has not banned payday loan companies. However, recent court rulings may make banning all payday loan companies impossible. Many companies are able to operate with no regard for state law because the payday loan company is owed by an American Indian tribe. There have been accusations that the tribes are not the actual owners of the payday loan companies, but merely a proxy for otherwise illegal activity. This practice has sometimes been called "rent a tribe." Notwithstanding the organizational structure of the corporations, courts have ruled that the tribes have sovereign immunity for business activities of the tribe even if it is off reservation or affiliated with a non-tribal entity.
Sovereign immunity is a legal concept that stands for the proposition that an independent sovereign can do no wrong and cannot be sued absent its consent. Pursuant to the various treaties between the United States and the different American Indian tribes most Indian reservations are essentially a separate country. Recent rulings seem to stand for the proposition that, absent waiver or congressional authority, the various Indian tribes cannot be sued for violations of State usury laws.
Michael A. Dye, a consumer bankruptcy attorney in Broward County, Florida stated "I have read two cases regarding sovereign immunity as it pertains to Indian tribes and payday loans. Both of the cases were filed in state courts. There does not appear to be any Federal Case law on point. Due to the small amounts of money loaned and the suit being based on State law, the issue appears to have evaded Federal Review. I would be interested to see what happens if one of these cases was filed as an adversary proceeding within a bankruptcy case. Since the Federal District Court assumes jurisdiction over all matters including cases dealing strictly with State Law, it might be the only way to get it into the Federal Courts."
ABOUT THE LAW OFFICES OF MICHAEL A. DYE, P.A.: Michael Dye is a consumer bankruptcy attorney licensed in the State of Florida. The firm is a debt relief agency. In addition to consumers rights claims, their attorneys help individuals file for relief under the United States Bankruptcy Code. For more information call (954)745-5848 or visit www.BKBroward.com.