Christy Bieber
5 min read
Alan Culbert just wanted to buy some presents for his grandkids and fix up his car. Since the Harvard-educated 91-year-old veteran and Bay Area resident didn't have the cash, he took out a $900 loan from Plain Green Loans, unaware that it would lead him toward potential financial ruin.
According to a story from ABC 7News, the Montana-based lender Culbert borrowed from was one of a few companies that accepted his online loan application. Culbert was happy to see the lender advertise an easy borrowing process, with "better rates," and an "excellent" 5-star rating. He took the money, paid back the $900 within two months, and thought he would move on with his life — but that didn't happen.
"I had no idea there was going to be an interest charge," Culbert said. Sadly, there wasn't just an interest charge — it was 682%, and Culbert was left with $2,646.69 in interest costs, accounting for more than half his monthly income.
If you're wondering how this is legal, it's because the loan came from a native tribe. Here's why that simple fact left Culbert in a tough spot with no clear idea of what to do next.
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Culbert's loan came from the Chippewa Cree Tribe of Rocky Boy's Reservation, but it could have come from one of many native tribes that offer high-interest rate loans. The tribes argue that they have sovereign immunity and are thus governed by federal — not state — lending laws.
That creates a problem because the federal government doesn't limit what rate lenders can charge outside of a 36% limit on loans offered to active-duty service members. This wouldn't have protected Culbert, who is a veteran, and, because tribal governments are independent of state governments, California's 10% cap on most consumer loans didn't protect him either.
Some states have recognized this issue and taken steps to ensure their residents can't be charged so much to borrow. Connecticut, Arkansas, New York, Pennsylvania, Virginia and West Virginia have mostly eliminated tribal loans, and Minnesota put a 36% cap in place, while also making it impossible to collect excess fees.
