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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Dec 27, 2011

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Indian tribes may have found an industry outside the arena of casinos and gambling. A reservation located deep in Montana is pioneering the way for its other sovereign counterparts as it begins a new venture in the world of payday lending.


Neal Rosette, Chippewa Cree’s former executive administrative officer, and now the CEO of Plain Green Loans, felt this was the perfect time and the perfect industry to break into. “We are sovereign nations and we have the ability to create our own laws that regulate our businesses such as this,” he said to The Associated Press.


Comments such as that are what scare consumer protection groups though. Payday loans are commonly viewed as the most notorious of all forms of borrowing. Consequently, consumer advocates have struggled to pass regulations on this business, and continue to struggle pushing new restrictions every day. But on Indian reservations, most consumer protection groups will have little to no say on what kinds of laws can be passed since reservations are considered sovereign.


The Chippewa Cree tribe has responded to anticipated opposition by claiming they are not offering payday loans. Rather, they say their loans are paid off over a period of several months in two week or four week installments.


Critics say that’s nothing but semantics. Payday loans aren’t necessarily defined by being paid off in two weeks. Rather, the nature and annual percentage rate (APR) of the financing is what defines this type of borrowing, and the money offered by Plain Green Loans is given at an APR of 360 percent—right on par with many typical payday loan offers.


To further prove this point, Plain Green Loans itself posts an example of a $600 loan paid back in 12 bi-weekly payments. By the time consumers pay this loan off, they would have shoveled over $1,261.32—more than twice the amount they borrowed.


This act of creating lending establishments with loans offered at very high rates, yet shying away from the “payday loan” title has been a growing trend. Within the last year, former executive of Google, Douglass Merrill, started a new online lending company called ZestCash. With APRs ranging from 200 to more than 400 percent, Merrill still boldly places a “This is not a PayDay Loan” link on the company’s homepage.


While Plain Green Loans holds on to the claim it’s not a payday loan lender, and despite the fact it has comparable APRs, the tribe is also following the typical route of public disapproval. After less than a year, the Better Business Bureau has already received 20 complaints and rated the company with an F.


“That’s part of this industry—complaints—regardless of you are,” responded Rosette to the AP.