| NEW YORK
NEW YORK Jan 23 U.S. online lender Western Sky
Financial LLC has agreed to pay a $1.5 million penalty and
provide refunds to New York borrowers on loans for which it
charged interest rates as high as 355 percent, the New York
attorney general said on Thursday.
The lender had claimed ties to the Cheyenne River Sioux
Tribe in South Dakota and immunity from state and federal law.
New York law prohibits most non-bank lenders not licensed by
the state from charging more than 16 percent interest on small,
The agreement, which settles a New York lawsuit, comes as
states across the country have cracked down on Internet lenders
offering so-called "payday" loans with exorbitant interest
Western Sky suspended operations in September as a result of
what it called "overreach by state regulators."
A lawyer for the company did not respond to a request for
comment on Thursday.
New York Attorney General Eric Schneiderman, who sued Western
Sky, its owner and affiliated companies in August, said the
companies made 18,000 high-interest loans to New Yorkers since
2010, lending nearly $40 million in principal.
A $1,000 loan could cost as much as $4,942 in finance
charges, fees and principal over two years, Schneiderman said.
Under the terms of the settlement, Western Sky and
affiliated companies, which offered and arranged for the loans,
agreed to stop collections from New York consumers who've paid
more than their principal, and to cease collecting interest from
all other New Yorkers, Schneiderman said.
A proposed order and judgment reflecting the settlement's
terms has been submitted to New York state court, where the
lawsuit was filed, Schneiderman said. He is expected to formally
announce the deal on Friday.
Colorado settled a similar case against Western Sky and
affiliated companies on Wednesday, agreeing to pay that state
$565,000, Colorado Attorney General John Suthers said.