New York Attorney General Eric Schneiderman on Monday announced that his office filed a lawsuit against two out-of-state companies for violating New York’s usury and licensed-lender laws by charging “usurious rates” on short-term loans issued over the Internet.
Usury is defined as “the lending of money at exorbitant interest rates,” according to the Merriam-Webster online dictionary.
The lawsuit targets Western Sky Financial, LLC; CashCall, Inc.; WS Funding, LLC, and their owners, Martin Webb and J. Paul Reddam.
(Sponsored)
How to Generate Staff Buy-In for Cloud Document Management
How businesses manage important documents has changed quite a bit throughout history. Information that used to be housed in filing cabinets and rolodexes is now stored digitally, often in one
Important Tax Law Changes To Be Aware Of
Effective planning for your construction business not only includes understanding the items that impact your operations but also the results that taxation on your profits will have on your net
Western Sky and WS Funding are located in South Dakota and CashCall is situated in California. None of the companies sued is licensed in New York, Schneiderman added.
The suit alleges the companies charged annual rates of interest from 89 percent to more than 355 percent to thousands of New York consumers, Schneiderman’s office said.
The interest rates “far exceed” the maximum rate allowed under New York law, which is limited to 16 percent for most lenders not licensed by the state, the attorney general said.
“Western Sky and CashCall charged exorbitant interest rates on their loans to scam New Yorkers out of millions of dollars,” Schneiderman said in a news release. “With this case and others, my office will continue to fight to protect New Yorkers from illegal-business practices and stop companies that seek to prey upon consumers facing tough economic times.”
The companies targeted “vulnerable” New York consumers through television and Internet advertising that promised “fast cash” to consumers in urgent need of money, according to the attorney general’s office.
The companies “took advantage” of these consumers by charging “extremely high rates of interest” that were above New York’s usury caps, Schneiderman’s office added.
For example, consumers that received loans of $1,000 were charged an interest rate of more than 234 percent and had to repay as much as $4,942 in interest and principal over just two years, the office said.
Since 2010, the companies have made at least 17,970 loans to New York consumers, lending more than $38 million in principal, according to the Schneiderman’s office. New York consumers owed more than $185 million on these loans in finance charges alone, the attorney general added.
Schneiderman’s lawsuit, which is based on an investigation that began last fall, seeks a court order prohibiting the companies and individuals from further illegal lending or enforcing existing, usurious loan contracts, cancellation of all outstanding loans, restitution for New York borrowers of all interest collected above the legal limit of 16 percent interest, and “disgorgement,” or repayment, of the profits involved, according to his office.
The lenders also face penalties of up to $5,000 per violation for deceptive acts and practices, Schneiderman’s office said.
Contact Reinhardt at ereinhardt@cnybj.com
