On November 13, the CFPB filed an amicus brief in a Second Circuit case stemming from efforts of the New York Department of Financial Services (DFS) to crack down on lenders offering allegedly illegal payday loans. Certain online lenders affiliated with Native American tribes sought to enjoin the DFS from interfering with their payday lending activities, claiming that the state’s actions violate the tribes’ inherent sovereignty and the Indian Commerce Clause of the U.S. Constitution. The federal district court denied relief last month, holding that the plaintiffs failed to identify an applicable “express federal law” prohibiting the state’s activity and that the tribes are subject to the state’s anti-usury laws, which the plaintiffs’ appealed.

In its amicus brief, the CFPB urges the court to reject the plaintiffs’ contention that the Consumer Financial Protection Act (CFPA) prevents the state from applying its consumer-protection laws to tribally-affiliated lenders, arguing instead that the CFPA “expressly preserves states’ varying consumer-protection laws as applied here, including those that would outlaw loans with certain terms.” According to the CFPB, “[a]lthough the CFPA recognizes that tribes, like states, have a role in regulating consumer financial products and services, and that the CFPB will coordinate with tribes and states in protecting consumers, that has no bearing on whether tribally affiliated lenders must comply with state laws.”