New York AG Sues Online Payday Lenders

August 13, 2013
American Banker 
payday lending news

New York Attorney General Eric Schneiderman filed suit Aug. 12 against a trio of online lenders and their owners, which he claims violated usury laws by issuing loans bearing annual interest rates of as much as 335 percent. Allegedly, the companies falsely told customers in New York -- which has a 16 percent ceiling on loan interest -- that since the loans were made online, New York's usury laws did not apply. Schneiderman's office also claims the companies made dubious debt collection calls in violation of state laws. The three firms -- Western Sky Financial, CashCall Inc., and WS Funding -- have made almost 18,000 loans to New Yorkers since 2010. The borrowers owe more than $185 million in finance charges on the $38 million in principal, according to the lawsuit. Schneiderman is requesting that all three companies -- which are facing penalties of up to $5,000 per violation -- be prohibited from making additional illegal loans, nullify all existing loans, and pay restitution to borrowers affected by their illicit tactics.
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