New York Attorney General Eric T. Schneiderman announced that his office has filed a lawsuit against Western Sky Financial, CashCall, WS Funding and their owners, Martin Webb and J. Paul Reddam, for violations of New York’s usury and licensed lender laws in connection with their issuing of personal loans over the Internet.
The companies charged annual rates of interest from 89% to more than 355% to thousands of New York consumers. These interest rates far exceed the maximum rate allowed under New York law, which is limited to 16% for most lenders not licensed by the state. None of the companies sued are licensed in New York.
“Western Sky and CashCall charged exorbitant interest rates on their loans to scam New Yorkers out of millions of dollars,” said Attorney General Schneiderman. “With this case and others, my office will continue to fight to protect New Yorkers from illegal business practices and stop companies that seek to prey upon consumers facing tough economic times.”
The companies, located in South Dakota and California, targeted vulnerable New York consumers through television and internet advertising that promised “fast cash” to consumers in urgent need of money. The companies took advantage of these consumers by charging extremely high rates of interest that were above New York State’s usury caps. For example, consumers that received loans of $1,000 were charged an interest rate of more than 234%, and had to repay as much as $4,942 in interest and principal over just two years.
New York borrowers who questioned the legality of these loans were falsely told by the companies that New York law did not apply. Some consumers were also targeted with deceptive debt collection calls in further violation of New York law.
Since 2010, the companies have made at least 17,970 loans to New York consumers, lending more than $38 million in principal. New York consumers owed more than $185 million on these loans in finance charges alone.
This piece was originally written for abfjournal.com