Borrowers can cash in on loan settlement
Michigan's Attorney General has reached a settlement that could help consumers obtain relief from sky-high loan rates from an online lender called Western Sky.
- Michigan consumers paid dearly for loans obtained by the Internet-based provider. Interest rates charged ranged from 89%25 to 169%25%2C according to state regulators.
- Michigan residents who took out Western Sky loans should check their mail for a notice and consider applying for a settlement.
About 17,500 Michigan consumers who obtained supposed quick-fix loans from Western Sky with nose bleed interest rates could benefit from a new settlement agreement.
State regulators announced Thursday that a $2.2 million settlement was negotiated with South Dakota-based Western Sky Financial and California-based CashCall Inc.
The deadline to file a claim is Sept. 18.
"We will not tolerate any businesses attempting to skirt the rules at the expense of Michigan consumers trying to make ends meet," Michigan Attorney General Bill Schuette said in a statement.
Michigan consumers paid dearly for loans obtained by the Internet-based provider. Interest rates charged ranged from 89% to 169%, well above limits in Michigan, according to state regulators. Western Sky also charged processing fees of up to $500 on many loans, exceeding a $300 cap allowed for licensed lenders.
As a result of the high fees and high rates, a consumer who borrowed $1,000 from Western Sky would had faced repaying more than $4,000 during the loan's two-year term.
Other Western Sky loans with a six-month repayment term carried an APR of more than 350%, state regulators said.
"Western Sky's actions were illegal and unacceptable," said Ann Flood, director of the state Department of Insurance and Financial Services, in a statement.
The settlement with Michigan will automatically reduce the interest rate on all loans owned by Western Sky and CashCall to Michigan's legal rate of 7%. Additional relief will be available for consumers who file a valid claim.
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 was sorry she fell for one of these Western Sky loans shortly after seeing a TV ad for 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.
Michigan residents who took out Western Sky loans should check their mail for a notice and consider filing a claim in order to take advantage of the additional relief that may be available.
Those with questions about the settlement can call 866-336-5756 or go online to www.MIWesternSkySettlement.com. ?
Contact Susan Tompor: 313-222-8876 or stompor@freepress.com.