TULSA, Okla. (AP) – Internet payday loan companies owned by Oklahoma Indian nations are coming into conflict with state regulators, a dispute that some say endangers consumers and cheapens the concept of tribal sovereign immunity.

Others defend the companies as American free enterprise at work.

Payday loans, small, short-term consumer loans typically used by people who don't have access to other forms of credit, are expensive and closely regulated by most states.

In Oklahoma, state law caps payday loans by licensed lenders at $500 with a maximum fee of $65.

Oklahoma, like most states, claims authority to regulate loans that are made to state residents.

But in nine instances last fiscal year, the Oklahoma Department of Consumer Credit was unable to resolve complaints involving Internet lenders that said they were owned by Indian tribes.

“That is the one area of regulation where it's extremely difficult to regulate, mainly because of the doctrine of sovereign immunity,” said Roy John Martin, general counsel for the department. “It's difficult from an enforcement standpoint.”

Because the federal government has granted tribes sovereignty, they are essentially the equals of state governments.

One national consumer advocate says if the sovereignty issue isn't decided, state regulation could become meaningless.

“I can tell you that if we don't get this issue settled, the industry has a huge incentive to move all of its business to tribally connected arrangements in an effort to evade state usury laws, state small loan rate caps, even state payday loan laws,” said Jean Ann Fox, director of financial services for the Consumer Federation of America.

Mark Leyes, a spokesman for the California Department of Corporations, which has been struggling with AmeriLoan, an Internet lender linked to the Miami Tribe of Oklahoma, since 2006, said an unregulated atmosphere is bad for consumers and unfair for lenders who are complying with state laws.

Attempts to reach Miami Chief Tom Gamble and Miami Nation Enterprises CEO Don Brady by telephone and at their Miami offices were unsuccessful.

In a March article, Charles Trimble, a member of the Oglala Lakota tribe and principal founder of the American Indian Press Association, decried the possibility of “renting” tribal sovereignty to payday loan companies.

“If so, it is rotten to the core and taints and weakens the sovereignty of all tribes,” Trimble's articles say. “Even if the tribes really do own the businesses, it still stinks. It's like having a pimp in the family; he shames everyone, but you can't disown him because he is family.”

But Darold Stagner, executive director of the Native American Fair Commerce Coalition and a Choctaw, said free enterprise forces have driven payday lending to the Internet, and state regulators are simply trying to protect vested interests that are stuck in an outmoded business model.

“I hope that tribal lending works out and works for a long time and gets very big and puts all the storefront operators out of business,” Stagner said.