People ripped off by Western Sky loans to get refunds
Refund checks are heading to Michigan consumers who were ripped off by sky high interest rates from Western Sky and CashCall.
Michigan consumers who were ripped off by illegal, high-priced loans from Western Sky Financial and CashCall are expected to see refund checks by Oct. 2 as part of an earlier-announced multimillion-dollar settlement.
More than 6,500 Michigan residents submitted claims to the settlement fund administrator. Notices were sent to consumers with potential claims between June 29 and Sept. 18. The deadline for mailing a claim was Sept. 18.
The state said it is hard to estimate the size of each borrower's refund. The amount will reflect, in part, the specific amount the borrower paid on his or her loan. The $2.2-million claim amount for refunds would be equally divided, as a percentage, among all filed claims.
As a result of the high fees and high rates, the state said earlier that a consumer who borrowed $1,000 from Western Sky would have faced repaying more than $4,000 during the loan's two-year term.
Michigan Attorney General Bill Schuette and Michigan Department of Insurance and Financial Services Director Patrick McPharlin announced the final claim details this week.
Possible relief under the settlement includes a refund, the reduction of a borrower's loan balance or a complete cancellation of the outstanding loan balance.
The total monetary value of cancelled loan balances was $15.72 million. The total value of modified or reduced loan balances was $6.85 million. The total refund amount will be $2.2 million.
Borrowers who received a notice should watch their mail for their refund check. But borrowers are also being warned about possible scams and reminded, once again, that they do not need to pay anyone or take any further action to receive a refund.
“The Legislature enacted interest rate limits on various types of loans to protect Michigan consumers, and we will not tolerate attempts to circumvent those laws and exploit our citizens," Schuette said in a statement.
State regulators noted that the Western Sky loans had interest rates of up to 169%.
Two years ago, the Department of Insurance and Financial Services moved to stop Western Sky from making unlicensed and high-interest loans to Michigan consumers. After negotiations, Western Sky discontinued any new lending in Michigan in September 2013.
A Lansing woman told me in 2013 that she fell for one of these Western Sky loans shortly after seeing a TV ad for the online lender. She wanted the loans to pay off two other payday loans but discovered that she would owe $11,412.12 over four years in interest alone after receiving $2,525 in credit.
If you filed a claim and have questions about your refund check, loan modification, or loan cancellation, or other questions, contact the settlement number for Western Sky and CashCall at 866-336-5756 or visit the settlement website at www.MIWesternSkySettlement.com.
If you have a complaint about another lender or loan, contact the Michigan Department of Insurance and Financial Services at 877-999-6442 or visit the DIFS website at www.michigan.gov/difs.
Contact Susan Tompor: 313-222-8876 or stompor@freepress.com. Follow her on Twitter @Tompor.