Case Against Upper Lake TLEs Voluntarily Dismissed in Kansas Federal Court

The Consumer Financial Protection Bureau (CFPB) voluntarily withdrew its case against four tribal lending entities (TLEs) owned and operated by the Habematolel Pomo Tribe of Upper Lake according to papers filed in the U.S. federal court for the District of Kansas. The notice of voluntary dismissal was signed by Vanessa Buchko, an enforcement attorney at the CFPB.

The notice of dismissal hopefully ends a litigation strategy by the Bureau that targeted tribal sovereignty through the use of the agency’s authority to combat unfair, deceptive, and abusive acts and practices (UDAAP). In a perverse adaptation of the UDAAP standard, the CFPB argued that the TLEs were violating federal law simply by refusing to adhere to certain state usury and licensing laws.

In April 2017, the CFPB brought a complaint against the Upper Lake TLEs for violations of the Truth in Lending Act and UDAAP. The agency argued that the TLEs failed to secure state lending licenses and adhere to state usury caps on loans delivered across the United States; the CFPB claims that this was an unfair and abusive practice under Dodd-Frank. As history has proven, this was an irresponsible use of the agency’s UDAAP authority and a clear attempt to trample on the rights of a sovereign tribal nation.

NAFSA provided an amicus brief to the judge in November supporting the dismissal of this case. As NAFSA explained in its brief: “The federal government and federal courts have repeatedly upheld the unique ability of Tribes to engage in commercial-governmental activity and the federal obligation to respect and protect that right. This case is important because its tests whether a rogue agency, in absence of specific Congressional direction and consumed with a singular, unrelated mission, can unilaterally override this well-recognized federal responsibility to American Indians.” The voluntary dismissal by the CFPB hopefully stands as recognition by the agency of tribal sovereign rights.