RED ROCK, Okla. - Online loans for people with bad credit - applying is easy, and approvals are fast.
One of those large lenders is in Red Rock, Oklahoma.
The hard-earned cash is from cash strapped consumers like Sonya Viers.
“It has taken a big toll on my life,” she said.
Viers is a single widow raising three kids.
She put in her application with American Web Loan online.
“They said they would loan me $800,” Viers said. “They sent me the documents, and I sent them my banking account number and they put it in my bank account.”
Viers said she made close to $2,000 in payments but noticed none of them were going towards her $800 principal.
“Nothing. Not one cent,” Viers said. “So, I called, and she said ‘No, if you'll read the terms, you have to pay over the $240 for any of that to become your principal.”
Ruben Tornini is Deputy Administrator for the Oklahoma Department of Consumer Credit, the agency that regulates lenders.
He said there's nothing he can do to help families like Viers', because the state has zero jurisdiction over tribal lending.
“They hide behind this sovereignty that is given to them by the federal government,” Tornini said. “Whenever we inquire about a consumer issue, there first response is we have no jurisdiction, which technically is correct.”
Meaning tribes can charge their customers really high interest rates and get away with it.
The Otoe-Missouria Tribe turned us down for a sit down interview, but Heather Payne, Public Information Officer for the Otoe-Missouria Tribe of Indians, sent us this statement:
“American Web Loan ensures customers can access convenient short-term loans at rates that are far more affordable than bank overdrafts, NSF fees, and other more-costly alternatives. In fact, the Consumer Financial Protection Bureau's Acting Deputy Director David Silberman recently testified that tribal installment loans are easier to repay than two-week payday loans. (http://www.mynafsa.org/cfpb-deputy-director-congress-tribal-online-installment-loans-easier-repay-payday-loans/)
Rates are customized using a consumer’s unique credit profile and are competitive with other short-term loan products. Interest is calculated daily; customers pay only for the credit they need for as long as they need it. American Web Loan always encourages (and never penalizes) early repayment.
Every year, thousands of American families trust American Web Loan when they are faced with an urgent financial crisis, even underbanked consumers with no credit history or poor credit. Our rates are fair, but also reflect the reality of lending to high-risk borrowers. American Web Loan prides itself in providing quality customer service, which is reflected in our 'B' rating with the Better Business Bureau.
Unlike banks, credit unions, or other financial institutions, where profits are used to enrich shareholders or investors, revenue from American Web Loan stays on the Otoe-Missouria reservation, benefitting our tribal members and the surrounding community in northern Oklahoma. Critical medical, social, educational and cultural programs, as well as dozens of high-paying careers, would be reduced or eliminated without the financial support provided by our lending portfolio.”
Here's the thing: tribes only receive a small portion of the profits and, according to some reports, sometimes as little as 1 percent.
Tornini said, in most cases, they partner with a non-tribal lender that will use the tribe to get rich and get around state laws.
“It's a complicated matter,” he said. “The federal government really needs to step in.”
Right now, 18 states plus the District of Columbia have tight regulations regarding pay day loans but no restrictions regarding tribal installment loans.
Still, one of those states, Connecticut, fined the Otoe Missouria Tribe hundreds of thousands of dollars for charging customers in their state excessive interest rates.
Other tribal leaders have even come out against the tribe and its online payday lending practices.
Viers is pushing for a similar call to action here at home.
American Web Loan eventually forgave her principal but only after she filed a grievance with the Tulsa Better Business Bureau.
Tulsa BBB President and CEO, Amie Mitchell, said American Web Loan has a B rating because they've answered and resolved their nearly 400 customer complaints.
“Those can be tactics of misrepresentation over the phone, bad customer service, not clearly stating to the consumer what they're getting involved in or the percentage rate they might be paying,” Mitchell said. “We've sent them a letter saying you have a pattern of complaints, please tell us how you are going to fix this, and they have not addressed that.”
The Otoe-Missouria Tribe tells the In Your Corner team its "customers pay only for the credit they need for as long as they need it, and they always encourage and never penalize early repayment."
The bottom line: these high interest online loans are almost never a good idea for consumers.
Contact the Oklahoma Department of Consumer Credit for questions about tribal installment loans and which loan options are best for you.