Big Picture Loans Scores Landmark Victory for Tribal Lenders

A class action lawsuit against Big Picture Loans has been officially canned. The decision was squashed by the Fourth Circuit of the United States government. Big Picture Loans is a tribal lender. Tribal loans offer consumers unsecured, emergency loans ranging from $200 up to $3,500 with interest rates as high as 475% APR.

In 2017, disgruntled consumers stated that federal (and individual state laws) applied to Big Picture Loans.  The fact that they have sovereign immunity should not matter. The tribal lender, however, argued that they are entitled to sovereign immunity, regardless of state or federal laws. The court initially rejected Big Picture Loans argument that, they should be immune according to tribal laws.

However, an unexpected turn came about when the U.S. District Court decision was reversed by the Fourth Circuit.

Reason: The U.S. District Court was found to be erroneous in their decision in claims that Big Picture Loans is not arms of the Tribe. Luckily for BPL, the lawsuit was dismissed in the Fourth Circuit Court. In conclusion: the Fourth Circuit will now adopt the Ninth Circuit Court first factors to effectively determine immunity for any tribal nation moving forward.

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How This Impacts Tribal Lenders Moving Forward

If you’re a tribal lender, you should follow these five factors to avoid a lawsuit:

1. What is the Method of Creation?
   Business formation, under the Tribal laws, were arguably in favor of the lender’s sovereign immunity. The business formation was legally created under the Tribe’s Business Entity Ordinance.  Big Picture Loans, and the company Ascension, were simply exercising the Tribe’s Constitution
2. What is The Tribe’s Purpose?
   The U.S. government does not give any federal or state assistance to tribal nations.  That said, Big Picture Loans explicitly proved that their lending program supported the economic development and growth for their tribal nation.  Big Picture Loans proved to the courts, without doubt, that their business revenue funded essential opportunities for new homes, college scholarships and much, much more. It comes down to one thing:  Can the tribal lender prove business revenue clearly helps fund the economic development of their nation?  If so, the Purpose factor protects them.
3. How is the Lender Structured, Who Retains Ownership, and How is it Managed?
   Big Picture Loans is legally incorporated under their tribal nation laws.  The lender also operates, along with manages the business.  This act gives the lender immunity.
4. Lender Must Follow The Intent to Extend Immunity
   This factor states that lenders  cannot extend immunity to any of their partners.  And since BPL did not grant immunity to Ascension, they are in the clear and meet the criteria.
5. The Financial Relationship Involved
   Lawsuits can be devastating – especially for a tribal nation.  If this lawsuit went through, it would officially put Big Picture Loans out of business.  It would also bring all economic development in their community to a halt.

These 5 factors are what saved Big Picture Loans from a potentially devastating lawsuit.