The Consumer Financial Protection Bureau launched another salvo Thursday in its battle against the tribal lending industry, which has claimed it’s not subject to regulation by the agency.

The federal regulator sued four online lenders affiliated with a Native American tribe in Northern California, alleging they violated federal consumer protection laws by making and collecting on loans with annual interest rates starting at 440% in at least 17 states.

Since at least 2012, Golden Valley and Silver Cloud offered online loans of between $300 and $1,200 with annual interest rates ranging from 440% to 950%. The two other firms, Mountain Summit Financial and Majestic Lake Financial, began offering similar loans more recently, the bureau said in its release.

 The case is the latest in a handful of moves by the CFPB and state regulators to rein in the tribal lending industry, which has grown in recent years as many states have tightened regulations on payday loans and similar types of small consumer loans.

Tribes and tribal entities are not subject to state laws, and the lenders have argued that they are allowed to make loans irrespective of state interest-rate caps and other rules, even if they are lending to borrowers outside of tribal lands. Some tribal lenders have even fought the CFPB's demand for records, arguing that they are not subject to supervision by the bureau.

The core of the bureau’s argument is this: The lenders made loans that are not legal under state laws. If the loans aren’t legal, the lenders have no right to collect. So by continuing to collect, and continuing to tell borrowers they owe, the lenders have engaged in “unfair, deceptive and abusive” practices.

Critics of the bureau balk at this argument, saying it amounts to a federal agency overstepping its bounds and trying to enforce state laws.

“The CFPB is not allowed to create a federal usury limit,” said Scott Pearson, an attorney at Ballard Spahr who represents lending firms. “The industry position is that you should not be able to bring a claim like this because it runs afoul of that limitation of CFPB authority.”

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