Washington DFI Issues Statement of Charges Against Five Unlicensed Online Lenders, Including Western Sky Financial

The Washington State Department of Financial Institutions (DFI) Consumer Services Division announced today it has filed a Statement of Charges against five unlicensed online lenders owned and operated by Martin Webb:

  • Western Sky Financial, LLC;
  • Payday Financial, LLC, d/b/a Big Sky Cash and Lakota Cash;
  • Great Sky Finance, LLC, d/b/a Great Sky Cash;
  • Green Billow, LLC, d/b/a Four Seasons Cash; and
  • Red Stone Financial, LLC, d/b/a Red Stone Cash.

The unlicensed lenders have made thousands of loans to Washington state residents online at rates between 89.68 percent and 1,825 percent—rates that would be illegal even if the entities held licenses from DFI.

The maximum rate of interest allowed under RCW 19.52, the state of Washington’s usury statute, is 12 percent. The maximum rate of interest allowed for licensees under the Consumer Loan Act is 25 percent.

“These companies are preying on financially struggling Washington consumers with loans at unconscionable repayment terms,” said DFI Director of Consumer Services Deborah Bortner. “For example, when a borrower takes out a $2,600 loan from Western Sky and follows the proposed repayment schedule, it takes that borrower four years to repay the loan and costs $14,000 in interest. That is just not right. It is no wonder that complaints from our consumers continue to roll in.”

If credit unions receive inquiries or complaints from members, Northwest Credit Union Association (NWCUA) Director of Compliance Services said the members should contact the attorney general’s office or visit the DFI’s website, where consumers and institutions can verify whether a company offering loans is licensed by DFI and can file a complaint against a company.

The unlicensed lenders, located on the Cheyenne River Sioux Tribe Indian Reservation within the state of South Dakota, are owned and operated by Martin Webb as an individual tribal member rather than by the Cheyenne River Sioux Tribe or any of its political subdivisions.

Having received at least 22 complaints against these entities from Washington residents, DFI issued a consumer alert in August 2011 warning consumers that Western Sky Financial and Lakota Cash were not licensed to make loans in Washington.

The Consumer Loan Act authorizes the director to file charges against companies and individuals believed to have violated the act. The charges are not a finding or order that the respondents have actually violated the act, and all named respondents have the right to request an administrative hearing on the charges.

Colorado, Maryland, Missouri and Florida have all recently taken legal action against the same entities for making loans without a license and for offering rates of interest that violate the various state interest rate limits. The Federal Trade Commission (FTC) has taken legal action against the entities as well, alleging illegal collection practices.

About the Washington State DFI

www.dfi.wa.gov – 360.902-8700 – 877.746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department also works to improve financial education throughout Washington through its outreach programs and online clearinghouse www.dfi.wa.gov/financial-education. In addition to posting information about licensees and administrative actions, DFI uses the web and social media to provide financial education information: http://www.twitter.com/FinEd4All, www.twitter.com/DFIConsumers, www.finlit.blogspot.com, www.youtube.com/user/WADFI, www.homeownership.wa.gov.

About Division of Consumer Services

www.dfi.wa.gov/cs – 360.902-8703
The mission of the Division of Consumer Services is to protect consumers from illegal and fraudulent lending practices. The division accomplishes its mission through licensing, licensee examinations, investigations, and enforcing selected state and federal statutes and rules. Consumer Services regulates the business activities of consumer loan companies, mortgage brokers, money transmitters and currency exchangers, as well as check cashers and sellers, also known as “payday lenders.” The division is entirely self-supporting, with funding provided by licensing, auditing, and policing of regulated businesses and individuals. No money is received from the state General Fund or other public revenue source.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Around the NW.