There was good news in the fight against predatory consumer lending yesterday as two online predators were forced to pay back more than $9 million in ill-gotten revenue. This announcement is from Attorney General Roy Cooper’s office:
CashCall, Western Sky to pay NC $9 million plus for illegal loans
Online fast cash lender that charged excessive interest rates now banned from business
North Carolina consumers who took out loans from online fast cash lenders CashCall and Western Sky will share more than $9 million in refunds under a settlement approved by the court, Attorney General Roy Cooper and Commissioner of Banks Ray Grace announced today.
“Instead of pulling you out of the ditch, these kinds of loans sink borrowers deeper and deeper in debt,” Cooper said. “North Carolinians who fall prey to these unfair and unlawful loans deserve relief.”
“We expect those who lend to North Carolina consumers to do so legally,” said Grace. “The defendants sought to circumvent the law in order to charge consumers illegal fees and interest rates resulting in a cycle of debt. This hurts not just consumers but other licensed lenders that abide by the law.”
In December 2013, Cooper and the North Carolina Office of the Commissioner of Banks filed suit against CashCall, Western Sky and related companies for violating North Carolina laws that ban excessive interest rates on small consumer loans. According to the complaint, financially strapped North Carolina consumers who took out personal loans of $850 to $10,000 from the defendants faced annual interest rates of 89 to 342 percent, far in excess of rates allowed under state law. In August 2015, at the request of Cooper and the Commissioner of Banks, the court banned the companies from making or collecting on loans in North Carolina.
Cooper said he was encouraged by a proposed new federal rule that gives more protections to borrowers nationwide but warned the rule is weaker than North Carolina’s law which outlaws payday lending. Currently there is no federal rule on payday loans. Though the proposed rule doesn’t preempt state law it fails to cap interest rates or give consumers the same protections afforded to members of the military.
“Though our state’s laws are stronger, tougher rules for payday lenders just over state lines could help protect North Carolina borrowers who seek loans outside state borders,” Cooper said.