Westlaw News

4th Circuit rejects agreement to arbitrate payday loan disputes under tribal law

An agreement by the borrower of a payday loan to submit any disputes to arbitration that is governed by tribal law is unenforceable, a federal appeals court has ruled.

The 4th U.S. Circuit Court of Appeals on Tuesday ruled in favor of borrowers who took out loans from payday lenders affiliated with Native American tribes in two related cases, finding that borrowers could not waive their future rights under federal law. The ruling allows their claims to proceed against Haynes Investments LLC, accused of operating an illegal payday loan scheme, and Sequoia Capital Operations LLC, one of its investors.

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