Following NY lawsuit, online lender to cease funding loans

NEW YORK Mon Aug 26, 2013 7:54pm EDT

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NEW YORK (Reuters) - An online lender accused by the New York attorney general of "scamming" consumers with high interest rates says it will cease funding loans next week.

Western Sky Financial LLC, which says it is owned by a member of the Cheyenne River Sioux Tribe in South Dakota, posted a notice on its website saying it would cease funding loans on September 3.

No reasons were given. The notice came two weeks after Attorney General Eric Schneiderman sued the company in a state court in Manhattan for charging interest rates as high as 355 percent for consumers who took out personal loans.

The interest rates exceeded the maximum 16 percent most lenders are allowed to charge under New York law, the lawsuit said.

The lawsuit, which also named CashCall Inc and its affiliate WS Funding LLC among other parties, said since 2010, Western Sky lent more than $38 million to New Yorkers via 17,970 loans.

Western Sky had already stopped lending to New York residents in March, amid the investigation. A spokeswoman for the company did not immediately respond to a request for comment.

The company had faced several other recent regulatory challenges by state officials.

The Michigan Department of Insurance and Financial Services on August 1 sent out a notice of intention to issue a cease and desist order against Western Sky.

The Michigan action came days after Georgia Attorney General Sam Olens sued Western Sky for making illegal payday loans.

In addition to Schneiderman's lawsuit, the New York State Department of Financial Services had also this month demanded Western Sky and 34 other companies stop offering online payday loans to New Yorkers.

Western Sky had claimed immunity from state and federal law because of its ties to the Cheyenne River Sioux Tribe. A lawyer for the company did not immediately respond to a request for comment Monday.

The case is People of the State of New York v. Western Sky Financial, et al, New York State Supreme Court, New York County, No. 451370/2013.

(Reporting by Nate Raymond in New York; Editing by Tim Dobbyn)

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Comments (1)
Daleville wrote:
Now if only Virginia would put a cap on interest rates. Even Arkansas has an interest rate cap.

We still have those awful car title loan companies here. Even West Virginia has banned them so their people have to come across the state line to get them and the officials in West Virginia are not happy about that at all.

Virginia likes to tout itself as business friendly. All I can say it is certainly isn’t citizen friendly.

Aug 26, 2013 8:18pm EDT  --  Report as abuse
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