There's little to the Plain Green Loans website to suggest a connection to Montana. A physical address in Box Elder and some fine print claiming company ownership by the Chippewa Cree Tribe are the only obvious links to the Rocky Boy's Indian Reservation, the online lending company's official headquarters. The customer service number goes to a call center in Las Vegas. Public relations requests are directed to an office suite on International Plaza in Fort Worth, Texas.
Yet CEO Neal Rosette, an enrolled tribal member, trumpets Plain Green Loans as a boon for Rocky Boy's. The company employs 29, he says, and has an eye to future expansion, including employing 20 more people in an on-reservation call center. Roughly 40 percent of the company's gross revenue will go back to the tribe, he adds.
"Plain Green has been a real godsend" for the tribe, Rosette says. "We just got through two floods—two presidential declarations—over the past couple years. The revenue stream and the economic development opportunity has come at a very, very opportune time."
So far, Plain Green Loans is Montana's sole example of a national push by payday lenders to find sanctuary from increasing demands for regulation of non-bank entities. Tribally owned and operating largely online, the company is currently free to charge interest above the 36-percent cap passed by voters in November 2010.
The average annual interest rate on a $600 loan from Plain Green is just a hair over 359 percent.
- A $600 loan from Plain Green compounds at 359 percent.
Numerous states have responded to lax oversight of non-bank lending entities in recent years by setting interest rate caps or passing all-out bans on payday loans. Payday lending is illegal in 13 states; 17 states and the District of Columbia have enacted double-digit caps. Since Montana passed Initiative 164, the number of licensed payday lending companies in the state has dropped considerably. The key to mounting such hurdles, from the payday lender perspective, lies in operating beyond the reach of state and federal governments: on Indian reservations and the internet.
Last month, Sen. Jeff Essman of Billings called on Montana Attorney General Steve Bullock to launch a deeper investigation into the potential skirting of state laws by tribal affiliated payday lenders. Bullock's chief of consumer protection, Jim Molloy, later explained that Bullock had already spoken with tribal representatives on Rocky Boy's, who assured him Plain Green Loans was not in violation of any state laws.
"At this point, the tribe has assured us of two things," Molloy says. "One is that it is a tribal-owned entity, and second [is] that they will not lend to Montanans."
There are a number of tribal-affiliated payday lenders in other states that have caught Bullock's attention, Molloy says. Any online lenders conducting business with Montanans have received stern warnings to comply with state law. The situation is made more difficult, Molloy adds, by the fact that these companies are headquartered not just in other states, but often in offshore locations.
"We communicated with one and got a return correspondence from an attorney in the Isle of Malta," Molloy says. "Obviously the Montana Attorney General's Office isn't going to be able to go over to the Isle of Malta and challenge them...But where the company is based in a location we can find them, we are aggressive with telling them they've got to either comply with our law or get out of the state and quit lending to Montanans."
Bullock's office is preparing to "go to battle" with one such company in court later this year, Molloy says.
Payday lenders have often been characterized as predatory, a point seemingly held up by a White House report on financial security last month. The report states that payday loans in 2010 totaled $29 billion. High fees associated with those loans cost Americans an average of $4.2 billion a year.
The regulatory and legal lines of payday lending on reservations remain blurry, which has led to a flurry of questions around new companies. A joint investigation by CBS News and the Center for Public Integrity this fall delved into the questionable ownership status of a tribal-affiliated online payday lender in Colorado. The Federal Trade Commission has since launched an investigation of its own.
Allen J. Parker in California recognized a promising business venture six months ago. He now brokers partnerships between federally recognized tribes and non-bank lenders, and says he's so far had "lots of interest," about three or four calls a week. On his website, Consultants4Tribes.com, Parker refers to these partnerships as the "Sovereign Model." He says the prime motivation for payday lenders moving to reservations is the "lack of consistency in the 48 states."
"It's growing," Parker says. "But this is a relationship-building endeavor."
Parker did note that earlier last year, the relationship was far more exploitative. Tribes didn't own many of the early companies, he says. Now it's evolved, with tribally owned companies like Plain Green providing new revenue streams for tribes. The Native American Lenders Alliance is now implementing best practices for those businesses.
"E-Commerce has provided a new opportunity for Native Americans to realize their dream of sovereignty—which cannot exist without economic development and self-determination," the NALA Board said in a joint statement to the Indy.
Pat Barkey, director of the University of Montana-based Bureau of Business and Economic Research, believes the presence of companies like Plain Green Loans could indicate a continued demand for short-term loans regardless of high interest. The question, he says, is "whether or not getting rid of payday loans is worse than having them."
"If they're indeed moving to the reservations, it proves that A: reservations are entrepreneurial, which I think we already know," Barkey says. "But it also shows that there's a demand that's not met when the rate is capped because the companies who were doing it are out of business."
For Rosette, Plain Green is a vital alternative for tribal members unable to secure small, short-term loans from banks. The company is growing fast, he says, which is probably why it's gained so much attention. He's aware that in any industry, "there are good actors and bad actors"—and he says Plain Green is taking huge strides as a good actor.
"We've provided scholarship money for our tribal college," Rosette says. "We also went above and beyond on Thanksgiving. We purchased turkeys and all the trimmings for every tribal member and delivered it to their house."