Online Lender Seeks Dismissal of New York Suit

September 17, 2013
Wall Street Journal 
payday lending news
Western Sky Financial LLC, an online lender targeted by state regulators for charging steep interest rates, said Sept. 17 that a lawsuit filed against it by New York Attorney General Eric Schneiderman should be dismissed because the state lacks authority over the business, which operates on an American Indian reservation. Though several of the online lenders singled out recently by the New York Department of Financial Services and other regulators do have affiliations with Indian tribes, the state has been targeting online lenders of all stripes that it says violate state laws that cap interest rates. The businesses say they are immune from state regulators' oversight because of their sovereign rights recognized under federal law, and as such are breaking no laws by charging rates that can exceed 300 percent.

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