South Dakota payday lender, Western Sky and its California-based partner, CashCall have agreed to pay a $2.4 to settle a lawsuit with the Massachusetts’ Attorney General’s Office and the state Division of Banks.
The settlement is over allegations that the payday lenders made illegal, unlicensed loans over the Internet to approximately 1,800 Massachusetts’ consumers. State regulators said that Western Sky and CashCall broke the law by charging high up-front fees with illegal interest rates between 89 percent and 135 percent and annual percentage rates ranging from 89% to 355%. Under Massachusetts state law, a lender can only charge a maximum of 12% on loans of $6,000 or less.
Western Sky and CashCall will refund more than 1,800 borrowers for illegal interest and fees, and also offer loan modification relief for some of the victims. The total settlement will provide more than $17 million in debt relief to Massachusetts consumers. To date, 93 percent or approximately $2.3 million of the total refunds have been distributed to 1,673 Massachusetts borrowers, regulators said.
“This settlement serves as a reminder to consumers that they need to be aware of the significant risks in connection with obtaining online short-term or payday loans,” John C. Chapman, undersecretary of the Office of Consumer Affairs and Business Regulation, said in a statement. “We are very pleased with the success of the refund process and I’m grateful for the joint efforts of the Division of Banks and attorney general’s office in securing this significant relief for Massachusetts consumers.”
“These companies’ deceptive and predatory practices put greater economic strain on consumers who were already financially vulnerable,” Attorney General Maura Healey said in a statement. “As a result of this settlement, more than 1,500 consumers have been repaid and these companies must cease operations in Massachusetts. We thank the Division of Banks for working with us on this case.”
Both Western Sky and CashCall have reached similar settlements in Connecticut, North Carolina and Maryland.
Under the terms of the settlement, any unclaimed funds requested after the filing deadline of June 26, 2016 were required to be turned over to the Massachusetts Treasurer’s Unclaimed Property Division. Massachusetts consumers who had a loan with Western Sky or CashCall and received a notice from the settlement administrator stating they are eligible for a refund may still claim the refund from the Commonwealth’s Treasurer by going online to http://www.mass.gov/treasury/unclaimed-prop/ or by calling (617) 367-0400.
Consumers can also call the settlement administrator, Dahl Administration, Inc. at (888) 755-9508 to determine if they are eligible for a refund. For any questions contact the Division of Banks’ consumer hotline at (617) 956-1509 or the Attorney General’s hotline at (617) 727-8400.