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Overcharged for online loan? You could get money back

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Posted at 7:46 AM, Jan 31, 2017
and last updated 2017-01-31 07:50:35-05

RICHMOND, Va. — About 10,000 Virginians overcharged on loans taken out with CashCall, Inc. will get money back as part of a $15 million settlement, the Virginia Attorney General’s Office announced.

“Online lenders are quickly becoming a new source of high-interest, financially risky loans,” Virginia Attorney General Mark Herring said. “Unfortunately, like payday and car title loans before them, these small dollar loans issued online often come with exorbitant interest and fees that can trap a borrower in a cycle of debt.”

CashCall, Inc. collected illegal interest of up to 230 percent on online loans made in amounts of between $700 and $10,000, according to the Attorney General’s Office.

More than $9 million in settlement money will go to payback approximately 10,000 Virginians who were overcharged illegal interest. Another $6 million will help provide debt relief and credit reporting corrections for those affected.

“This is the largest settlement my Predatory Lending Unit has secured against an online lender,” Attorney General Herring added. “I’m glad we’re going to be able to get some relief to consumers who were harmed and I hope this settlement sends a clear message that we will not allow lenders to deceive, defraud, or illegally abuse Virginians.”

If you believe you were a victim, or if you would just like additional information, you can contact Attorney General Herring’s Consumer Protection Section:

By phone: (800) 552-9963

By email: consumer@oag.state.va.us

More information from Attorney General Herring:

CashCall broke the law by engaging in a “rent-a-tribe” scheme, using a South Dakota company with a purported Native American tribe affiliation called Western Sky Financial, LLC as a façade for marketing and issuing its high-cost installment loans.

CashCall used Western Sky’s purported Native American tribe affiliation to deceive Virginia consumers into believing that no state or federal laws applied to its loans and that its excessive interest rates were legal.

CashCall then collected the Western Sky loans at interest rates ranging as high as 230% annually.

But, according to the complaint, Virginia’s usury laws did apply to CashCall’s loans and capped the collectable interest at 12% annually.

Thus, the complaint alleges the following violations of the Virginia Consumer Protection Act:

Misrepresenting that Western Sky is a Native American business entity;

Misrepresenting that the Western Sky loans were subject only to the laws and jurisdiction of a Native American tribe;

Misrepresenting that the Western Sky loans were governed by the Indian Commerce Clause;

Misrepresenting that the Western Sky loans were not subject to federal laws or the laws of the Commonwealth of Virginia;

Misrepresenting that Western Sky was the lender on CashCall’s Virginia loans; and

Misrepresenting the legality of charging more than 12% annual interest in the Commonwealth of Virginia.

The settlement includes the following key terms relating to CashCall’s Western Sky loans:

Restitution-CashCall agrees to establish a $9.435 million fund to provide restitution to approximately 10,000 borrowers who paid interest beyond the 12% annual interest that CashCall could have legally collected on its Western Sky loans.

Debt Forgiveness-CashCall agrees to forgive approximately $5.9 million on the Western Sky loans it holds that currently remain outstanding.

Civil Penalties/Attorneys’ Fees-CashCall agrees to pay to the Commonwealth of Virginia $100,000 in attorneys’ fees and civil penalties.

Injunction-CashCall is permanently barred from violating the Virginia Consumer Protection Act and from charging more than 12% annual interest on its loans without qualifying for a usury law exception.