Lenders Western Sky, CashCall Banned from Operation in North Carolina
An online fast cash lender that charged North Carolinians oppressive interest rates is now barred by court order from making or collecting on loans in North Carolina, Attorney General Roy Cooper said today in a written statement.
The court's finding stems from a 2013 suit filed against Western Sky Financial, CashCall, and related companies. The complaint alleged that financially-vulnerable North Carolinians took out personal loans of $850 to $10,000 that featured annual interest rates of between 89.68 percent and 342.86 percent. These rates are far above the maximum allowed by the state.
"Consumers in need of quick cash got stuck with loans they could not pay off," Cooper writes. "These kinds of loans are illegal in North Carolina because they bury struggling borrowers even deeper in debt and that's why we're fighting to keep them out of our state."
On Aug. 27, 2015, Special Superior Court Judge Gregory P. McGuire issued a preliminary injunction against Western Sky that will remain in place while the lawsuit proceeds. The order bars the company from:
- Advertising, offering or entering into contracts to make loans to North Carolinians.
- Soliciting or collecting payments from North Carolina consumers for loans.
- Selling or transferring any loans made to North Carolina consumers.
- Destroying, altering or concealing any records related to loans made to North Carolina consumers.
Cooper is asking the court to cancel Western Sky's illegal loans, order refunds for North Carolina consumers, and permanently ban the defendants from collecting on the loans and making any future illegal loans to North Carolinians.
Western Sky, based in South Dakota, argues that it is exempt from state laws that ban its loans in North Carolina because it is an Indian tribal entity. The court found that Western Sky is not protected by the fact that it is owned by a Native American. Cooper contends that Western Sky is really a for-profit company owned by an individual who happens to be a member of an Indian tribe, and is not owned or operated by or for the benefit of any tribe.
More than 300 North Carolina consumers have filed complaints with the North Carolina Attorney General's Office or the North Carolina Office of the Commissioner of Banks about the defendants' loans. Many of these consumers complained that they made loan payments for months only to learn that nearly all of their payments had gone toward interest and very little toward paying off the principal.
Predatory lending is against the law in North Carolina. The last storefront payday lenders were forced from the state in 2006, but lenders outside of North Carolina continue to reach North Carolina consumers through the Internet and advertising.