The Justice Department and the Consumer Financial Protection Bureau have sent civil subpoenas to dozens of financial companies, including the online lenders, many of which are located on Indian reservations to avoid complying with consumer protection laws. Also subpoenaed were banks and payment processors that do business with them, according to government and industry officials familiar with the probe. The people spoke on condition of anonymity because they were not authorized to discuss it.
The government is using a range of tools — anti-money laundering laws, routine oversight of banks’ books, subpoenas and state laws — that could snuff out an entire category of lenders who contend they are operating lawfully.
They can use the reservations to bypass state regulations, but not federal. I do understand there are certain "soverign state" concerns that come into play, but there has to be some sort of regulation on these.