CFPB Rule Would ‘Unlawfully Encroach on Tribes’ Native Americans Leaders Argue 

In November, Donald Trump overwhelmingly carried the Native American vote. By January, just six days before Trump took office, the Consumer Financial Protection Bureau published a regulation that tribal leaders say isn’t legal and would harm the growing financial services industry on Indian lands. 

At least four tribes are asking for the rule to be withdrawn, calling it an intrusion on tribal sovereignty and noting that tribes were never consulted. The latter point seemingly conflicted with President Joe Biden’s November 2022 pledge to bolster tribal consultations. 

As online lending has grown as a tribal industry, in some cases, tribes have established their own financial regulatory agencies to police the businesses. 

On Jan. 13, the CFPB published a proposed rule prohibiting financial institutions from including provisions in contracts in which customers could “waive substantive consumer legal rights” under federal and state laws to sue. Currently, a company and customer can mutually consent to a contract based on the laws of a specific state or country. 

As sovereign entities with their own governments, Native American tribes experience unique effects from federal regulations, argued Louis Taylor, chairman of Lac Courte Oreilles Tribal Governing Board. 

“Therefore, our Tribe is at a loss to understand why no consultation whatsoever took place with tribal governments in relation to the proposed rule,” Taylor wrote to the CFPB. “This is particularly troubling given that the parts of the proposed rule … appear to seek the imposition of state law and the enforcement of state law upon sovereign Indian nations. After hundreds of years of fighting against attempted state government encroachments, our tribe and others simply cannot let such an attack on tribal sovereignty stand.”  

The CFPB rule would infringe on the common practice of “choice of law” provision in contracts, which allows parties to contracts to determine what jurisdiction’s law the agreement will be governed by. 

This is particularly important for tribal businesses, said Loyola University law professor Adam Crepelle, author of “Becoming Nations Again: The Journey Towards Tribal Self-Determination,”

“Tribes rely heavily on economic development because they don’t have a tax base,” Crepelle told The Daily Signal. 

While many Americans associate economic development with casinos, increasingly tribes have been expanding into the financial services industry such as online lending, Crepelle said. 

About 30 tribes in mostly rural areas engage in online lending, Crepelle said. Online lending businesses have been a key for economic growth, tribal services and tribal development, according to the Native American Financial Services Association. 

Moreover, the Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, recognizes tribes as states, Crepelle stressed, which makes the lack of consultation even more problematic. 

Several tribes weighed in opposing the regulation. Federal regulations are required to be open to public comment. 

“Our Tribe was very disappointed to see that the Bureau made no effort to engage with tribal governments regarding this Proposed Rule, particularly given that the Bureau is well aware of its consultation obligations under federal law and policy,” James Williams, the tribal chairman for the Lac Vieux Desert Band of Lake Superior Chippewa Indians, wrote to the CFPB in a public comment.

Williams notes the Lac Vieux Desert tribe launched an online lending business in 2011 as part of its economic development that supports the tribe’s governmental services such as education and social services programs, elder programs, housing, cultural and language programs, Tribal Court, and law enforcement. 

“In order to protect funds used by the tribe to support its citizens and its government, the tribal treasury must be protected against legal liability,” Williams continued.

Big Valley Band of Pomo Indians Chairman Flaman McCloud, Jr. also raised objections to the CFPB regulation. 

“Such action is inconsistent with federal law and policy (including the Bureau’s own tribal consultation policy), which requires that consultation take place before any formal federal action is taken that could impact tribal rights and interests,” Flaman said. 

A CFPB spokesperson did not respond to several inquiries from The Daily Signal over the last week. But the bureau’s press release says it is ensuring companies cannot use contracts to opt out of statutes passed by Congress or state legislatures.

“To access the American financial system, people should not be forced into forfeiting rights enshrined in law or our Constitution,” then-CFPB Director Rohit Chopra said in a public statement when the regulation was published. “Companies should not weaponize fine print to deplatform or purge people from the financial system.”

Trump ousted Chopra, a Biden appointee, from the director’s position. The White House’s Department of Government Efficiency has targeted CFPB to close down. The agency has faced numerous controversies in recent years, including a major data breach and settling a racial discrimination lawsuit. 

Trump named Treasury Secretary Scott Bessent as the acting director of the CFPB after ousting Chopra. The Treasury Department did not respond to an inquiry for this story. 

However, the proposed regulation hasn’t been removed.

Otoe-Missouria Tribe of Indians Chairman Jon R. Shotton argued the regulation would “unlawfully encroach on tribes’ ability to enact and be governed by their own laws, and it frustrates the federal policy of promoting tribal self-determination.” 

“It is a fundamental aspect of tribal sovereignty that tribes have the power to pursue tribal economic development, and current federal policy requires the protection and promotion of tribes’ ability to pursue this self-determination,” Shotton contends in public comment. “This exercise of tribal sovereignty and self-determination necessarily requires contractual freedom, including the right to freely negotiate issues such as choice-of-law, forum selection, and other dispute resolution procedures.” 

While she was a Harvard professor Elizabeth Warren, now a Massachusetts senator, was the architect of the CFPB. Interestingly, Warren famously pushed a now discredited story about having Native American heritage. 

Spokespersons from Warren’s office did not respond to inquiries from The Daily Signal for this story. 

Biden’s pledge for increased consultation focused on climate change but also stressed land use and economic development. Biden made the vow at the 2022 White House Tribal Nations Summit.

“Democrats want to talk to American Indians when it fits their policy preference,” said Crepelle of Loyola.

An NBC exit poll by Edison Research after the 2024 election said 68% of Native Americans backed Trump over Democrat Kamala Harris. That’s more than 57% of the white population that voted for Trump. While some questioned whether Trump ran that well, since the poll was only of 10 key states, Politico later reported on Trump’s strong showing with native voters. 

“In his last administration, seven tribes gained federal recognition,” Crepelle said, “Objectively, Native Americans did well under Trump.”

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