Online lender accused of violating New York rate caps
Eric T Schneiderman, New York Attorney General, believes Western Sky violated laws that cap rates on loans at 25%.
Filing the suit on Monday against the online lender that offers short term loans at interest rates of more than 300 percent. This is the latest in a battle by state authorities to stamp out cap rate violations and enforce local interest rate caps.
Those visiting the Western Sky website will find them claiming to operate “within the exterior boundaries of the Cheyenne River Sioux reservation” – out of the reach of state regulators including the Attorney General, Mr Schneiderman.
However, Mr Schneiderman was not convinced. The lawsuit said the lenders “an illegal and deceptive scheme to originate high-interest, personal loans to consumers in New York.”
Making nearly 18,000 costly loans to New York residents since 2010, interest and feed alone amount to nearly $185 million.
Schneiderman said the company “preys upon New York consumers facing financial hardships with limited options.”
State prosecutors are working alongside Mr Schneiderman to keep online lenders from ignoring state restrictions.
This seems to be a big issue for people in America. Why aren’t we tackling this the same way in the UK?
All pay day lenders have been branded controversial with sky high interest rates and are seen to be taking advantage of those during a tough economic period.
What do you think?