Western Sky Financial Says It will Stop Funding Loans Sept. 3

Western Sky Says It will Stop Funding Loans Sept. 3Western Sky Financial, the familiar and controversial online lender that offers short-term loans carrying triple-digit interest rates, said it will “stop funding loans” on Sept. 3.
The announcement on Western Sky’s website comes about two weeks after New York Attorney General Eric T. Schneiderman announced that the state filed a lawsuit against Western Sky Financial,  also named CashCall, its affiliate WS Funding  and their owners, Martin Webb and J. Paul Reddam, for violations of New York’s usury and licensed-lender laws.
Other state authorites and federal regulators are cracking down on online payday lending, a blossoming industry that operates under a spectrum of unclear and uneven laws.
These loans are notorious for sky-high interest rates and balloon payments, consumer advocates and authorities say. The lenders say their are being singled out while they cater to customers unable to obtain loans from banks.
Western Sky is based at a tribal reservation in South Dakota and is contending with legal battles in several states. The company has claimed immunity from state and federal laws because of its ties to the Cheyenne River Sioux Tribe.
In a recently added statement on its website, Western Sky attempts to distance itself from the label of payday lender.
“Western Sky is not a payday lender,” the website states. “Not a short term lender, our loan periods range from 12 months to 7 years with no prepayment penalty.”
Nonethess, the Michigan Department of Insurance and Financial Services has sent out a notice of intention to issue a cease and desist order against Western Sky.
Georgia Attorney General Sam Olens also sued Western Sky, alleging that the company is issuing illegal payday loans.
Western Sky and affiliates charged annual rates of interest from 89 percent to more than 355 percent to thousands of New York consumers, Schneiderman alleges.
For example, consumers that received loans of $1,000 were charged an interest rate of more than 234 percent, and had to repay as much as $4,942 in interest and principal over just two years, Schneiderman’s office said in a statement.

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