Western Sky to Pay Settlement of 169% Interest Rate Loan Peddling
- Michigan consumers have paid dearly for the loans obtained by the Internet provider. Interest rates ranged from 89% 25 to 169% 25% 2C depending on state regulators.
- Michigan residents who have taken out Western Sky loans should check their mail for advice and consider seeking a settlement.
About 17,500 Michigan consumers who got supposed quick fix loans from Western Sky with nosebleed interest rates could benefit from a new settlement agreement.
State regulators announced Thursday that a $ 2.2 million settlement has been negotiated with South Dakota-based Western Sky Financial and California-based CashCall Inc.
The deadline to file a complaint is September 18.
“We will not tolerate any business attempting to bend the rules to the detriment of Michigan consumers trying to make ends meet,” Michigan Attorney General Bill Schuette said in a statement.
Michigan consumers have paid dearly for the loans obtained by the Internet provider. Interest rates charged ranged from 89% to 169%, well above Michigan limits, state regulators say. Western Sky has also charged processing fees of up to $ 500 on many loans, exceeding the $ 300 limit allowed for approved lenders.
Due to the high fees and rates, a consumer who borrowed $ 1,000 from Western Sky would have had to repay more than $ 4,000 over the two-year term of the loan.
Other Western Sky loans with a six-month repayment term had an APR of over 350%, state regulators said.
“Western Sky’s actions were illegal and unacceptable,” Ann Flood, director of the State Department of Insurance and Financial Services, said in a statement.
The Michigan settlement will automatically reduce the interest rate on all loans held by Western Sky and CashCall to the Michigan legal rate of 7%. Additional relief will be available for consumers who file a valid claim.
Two years ago, the Department of Insurance and Financial Services decided to block Western Sky from granting unlicensed, high-interest loans to Michigan consumers. After negotiations, Western Sky terminated any new loan in Michigan in September 2013.
A woman from Lansing told me in 2013 that she was sorry that she fell for one of those Western Sky loans shortly after seeing a TV commercial for an online lender. She wanted the loans to pay off two more payday loans, but found out that she owed $ 11,412.12 over four years in interest just after receiving $ 2,525 in credit.
Michigan residents who have taken out Western Sky loans should check their mail for notice and consider filing a claim in order to take advantage of the additional relief that may be available.
Those with questions about the settlement can call 866-336-5756 or go online at www.MIWesternSkySettlement.com. ?
Contact Susan Tompor: 313-222-8876 or [email protected]