NY AG files lawsuit against sleazy loan companies

New York Attorney General Eric T. Schneiderman filed a lawsuit against personal loan companies for charging annual interest rates as high as 355 percent.

The lawsuit was filed Monday against Western Sky Financial, CashCall, WS Funding, and CashCall owner J. Paul Reddam and Western Sky owner Martin Webb.

The companies charged annual interest rates of 89 percent to more than 355 percent, higher than the maximum rate of 16 percent allowed for lenders not licensed by New York state…

In 2010, the three firms issued loans worth more than $38 million to New Yorkers and were owed as much as $185 million in interest and fees, more than five times the original loan amounts.

The lawsuit seeks a ban on further illegal lending, the cancellation of all outstanding loans, restitution for New Yorkers who paid above the legal limit of 16 percent and disgorgement of profits. The lenders could also face a $5,000 penalty for each violation for deceptive acts and practices.

Overdue.

11 comments

  1. Charles Cottle

    In Wisconsin there are no interest caps on payday loans. The predatory parasites who run these businesses routinely charge around 500% and some over 100% for short term loans. I am dismayed that the state legislature does nothing about this. As our Tea Party governor, Scott Walker, likes to say, “Wisconsin is open for business.’

        • Nik DeWitt

          I sincerely hope you never have to find out. They make pirates look like red cross helpers.. My state also clamped down on them a few years ago when people who were borrowing $500.00 couldn’t pay it off in two years. They have pretty much disappeared around here since then.

            • moss

              For folks who haven’t collateral, with credit requirements getting back to standard after the lax failures at oversight under Clinton and Bush the Little, these are folks who can’t get loans from banks. Payday lenders will loan to anyone – but, you sign away a big chunk of future paychecks at usurious interest rates.

              You bring in your paycheck to prove you have a job and sign a contract guaranteeing a big chunk of future paychecks regardless of circumstances.

              Another spin on the hustle is signing over the title to your car. In a society with minimal public transit, even the poorest migrant laborer has to have a car to get to work. Their only significant property. Pay the outrageous interest or lose mobility.

        • Charles Cottle

          Payday loans are short term loans – often as little as two weeks, but not exceeding 90 days. The amounts borrowed are usually small, $100 or $200 U.S., but the interest rates are exorbitant. Failure to pay the loan on time often results in a doubling of the interest owed. Many borrowers find themselves unable to repay the loans as the interest builds up.

    • moss

      That’s only one of several factors that make up a credit rating. How long have you lived where you are? Do you own a car? Do you have a history of paying all your bills – and on time? Have you declared bankruptcy within the last 7 years? Lots more.

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