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Cash Advance v. Colorado ex. rel. Suthers

Court Rules That Payday Lenders Are Not Automatically Protected From State Oversight



AARP’s brief supported the State of Colorado’s efforts to enforce laws to protect borrowers from exploitation by Internet payday lenders. The lenders claimed a relationship with tribal entities made them immune from state oversight.


The State of Colorado began investigating complaints that two Internet payday lenders, Cash Advance and Preferred Cash Loans, charged interest above that allowed by Colorado law. Additionally, the lenders allegedly were setting up five automatic loan renewals (or rollovers) even though state law allows only one rollover per loan.

The investigation revealed that the lenders were not licensed. The state issued cease and desist orders and requests for loan documents, followed by investigative subpoenas. When the lenders refused to turn over information, the state sought requests for contempt citations. The lenders moved to dismiss the proceedings, claiming they were not subject to the state’s authority because they are wholly owned subsidiaries of two Indian tribes, entitled to tribal sovereign immunity.

Joined by attorneys general or consumer credit administrators from nine states and five leading consumer groups, attorneys with AARP Foundation Litigation filed AARP’s friend-of-the-court brief. AARP noted the pernicious effects payday loans and other “fringe banking” products have on the people with low or fixed income who need small amounts of cash but are unable to get loans from mainstream lenders.

The Colorado Supreme Court ruled that the lenders do not have the automatic immunity they claimed. The court sent the matter back to the trial court with instructions to determine whether the lenders are owned and operated as “arms” of the Indian tribes and thus immune from state enforcement actions.
What’s at Stake

AARP’s brief discussed how payday lenders target the most vulnerable consumers and pointed out that the most at-risk members of society are in greatest need of strong laws and state and private enforcement efforts. Yet, payday and other fringe lenders historically have mischaracterized the nature of their products and otherwise structured the transactions to evade such oversight. The brief argued that the purported relationship between the lenders and Indian tribes appears to be just another such attempt and that, at a minimum, the state should be allowed to investigate this relationship.

Case Status

Cash Advance v. Colorado ex. rel. Suthers
was decided by the Colorado Supreme Court.

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Our legal advocacy initiatives  - conducted by AARP Foundation Litigation (AFL) - reflect more than 15 years of work in federal and state courts across the country. Through our efforts, we support the Foundation’s four priority areas: Hunger, Income, Housing and Isolation, and ensure that those 50 and older have a voice in the laws and policies that affect their daily lives.