A U.S. district judge ruled that the Federal Trade Commission has the authority under the FTC Act to regulate the arms of American Indian tribes, their employees and their contractors.

The decision stems from a case involving AMG Services Inc., a payday lending operation affiliated with an American Indian tribe. The defendants included automobile racer Scott Tucker, his brother Blaine Tucker, four other individuals, AMG Services, three Internet-based lending companies and six related companies.

The FTC alleged that the defendants violated the FTC Act by piling on undisclosed fees and by threatening debtors with arrest and lawsuits. According to the FTC, the defendants violated the Truth in Lending Act by giving inaccurate loan information to borrowers, and violated the Electronic Fund Transfer Act by requiring consumers to preauthorize electronic withdrawals from their bank accounts as a condition of obtaining credit. 

The defendants argued, when sued in April 2012, that they were exempt from FTC enforcement because of their tribe affiliation. They also claimed immunity from state legal proceedings. The FTC has stated that the connections to American Indian tribes often are tenuous.

According to documents filed by the FTC, the defendants’ deceptive and illegal tactics generated thousands of complaints to law enforcement authorities. In many cases, the defendants’ inflated fees left borrowers with supposed debts of more than triple the amount they had borrowed.

"This ruling [by U.S. District Judge Gloria M. Navarro] makes it crystal clear that the FTC’s consumer protection laws apply to businesses that are affiliated with tribes," said Jessica Rich, director of the FTC's Bureau of Consumer Protection. "It’s a strong signal to deceptive payday lenders that their days of hiding behind a tribal affiliation are over."

Navarro's ruling affirmed Magistrate Judge V. Cam Ferenbach, of the U.S. District Court for the District of Nevada, July 2013 decision

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