New York’s settlement with a South Dakota Internet lender targeted by state and federal officials in a crackdown on abusive lending may yield as much as $20 million in refunds for consumers, the state said.
Western Sky Financial LLC and companies that bought and serviced its loans, CashCall Inc. and WS Funding LLC, agreed to refund illegal interest charged to New York borrowers and a $1.5 million penalty as part of a settlement announced in January.
New York Attorney General Eric Schneiderman’s office said today that the refunds may total as much as $20 million and will be available to consumers who paid more than the maximum legal interest rate of 16 percent to the companies.
“Thousands of New Yorkers who were the victims of exorbitant and illegal interest rates can receive meaningful relief through our settlement fund,” Schneiderman said, urging affected consumers to file claims.
In a lawsuit filed in 2013, Schneiderman’s office accused the companies of scheming to make illegal loans with rates as high as 355 percent in Western Sky’s name.
Western Sky, which has said it was owned by a member of the Cheyenne River Sioux Tribe and subject to tribal laws, and Anaheim, California-based CashCall and its affiliates, have also been accused of operating illegal lending schemes by states including Minnesota, Colorado, North Carolina and Georgia.
The U.S. Consumer Financial Protection Bureau sued CashCall in December, alleging it engaged in abusive practices in an agreement with Western Sky. The case is pending.
Katya Jestin, a lawyer for the companies, declined to comment on the refunds.
New York customers who borrowed a total of $38 million from Western Sky later owed almost $185 million including interest and fees, the attorney general’s office said in its petition filed in state court in Manhattan.
The case is New York v. Western Sky Financial LLC, 451370-2013, New York State Supreme Court, New York County (Manhattan).
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