The idea that there are companies out there who do not have to follow state regulations in order to process payday loans is a scary thought for consumers.
The states began regulating these short-term loans with the intention of trying to keep the consumers protected from predatory lending practices. It seems that with the online payday industry booming, that there are off-shore and Native American companies who do not have to follow the state guidelines for these laws. The off-shore businesses are not U.S. companies therefore do not have to follow the rules set up by the U.S. government. The Native American companies do not follow commerce rules due to sovereign immunity. This immunity allows the tribal governments to make decisions without having to answer to the court systems. In other words, if you take out a loan with one of these unregulated companies and feel that your rights as a consumer have been jeopardized, you may not go back and sue them in the American courts. Tribal matters are usually thrown out when the area of concern is protected by sovereign immunity.
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