The Minnesota Supreme Court in October ruled that out-of-state Internet payday lenders will have to follow the state’s lender laws.

“The most common model, and the only one that eliminates legal exposure, is [for lenders] to comply with all of the laws in each state where borrowers reside,” Alan S. Kaplinsky, who leads the nationally-known Consumer Financial Services Group at Ballard Spahr, told Legal Newsline.

“Some payday lenders are located offshore and they hope that that will insulate them from exposure to the state laws where the borrowers reside. Some payday lenders use the tribal model in which they take the position that the sovereign immunity of Indian tribes protects them. The best model, and the safest model, is to comply to the extent possible with the laws of the states where the forwards reside,” Kaplinsky said.