The Feds Are Cracking Down on Tribal Online Lending

July 24, 2014

Economic opportunity has long been hard to come by on this remote Montana reservation near the Canadian border, where tribal members have relied on the government and a truck-stop casino for what few jobs existed.

But since the launch of an online-lending business four years ago—offering short-term, or payday, loans to customers with bad credit—the two tribes that share this stretch of grasslands believe they have found a path out of poverty and crushing 50% unemployment.

An abandoned convenience store hums with activity as young Native Americans sit at computers, tending to distant customers who seek loans with annual interest rates ranging from 100% to 782%. Online lending, made through 11 websites such as and White Hills Cash, makes up a fifth of the revenue on this reservation of 4,300 and employs 70 tribal members, Fort Belknap officials say.

However, tribal leaders contend the reservation's newfound economic lifeline is in jeopardy because the business venture has been swept up in a broad federal dragnet that has curbed its access to banks.

A Justice Department initiative, "Operation Choke Point," has put pressure on financial institutions to stop working with businesses, including online lenders, that the department says defraud vulnerable customers. Banks say they face a push from regulators to cut ties with short-term lenders. As a result, tribes across Indian Country, where Internet lending has grown more popular, have been forced to scramble to find willing partners.

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