Florida officials have announced coordinated settlements with online lenders Western Sky Financial, LLC, CashCall, Inc., WS Funding, LLC, and Delbert Services Corporation.
Florida Attorney General Pam Bondi and Office of Financial Regulation Commissioner Drew Breakspear had charged the companies with running an online lending scheme.
Coincidentally, there is a Florida class action settlement pending in U.S District Court for the Southern District of Florida, resolving charges that the lenders offered, serviced, and collected on Western Sky loans to Florida borrowers with illegal interest rates of more than 18%.
Assuming the court takes final action, officials say some Florida consumers stand to share more than $11 million.
“Lending schemes harm consumers seeking financial assistance, and with these settlements, Florida borrowers will now be better protected from such business practices,” Bondi said. “Thanks to a great partnership with the Office of Financial Regulation, Floridians will receive millions in restitution.”
14,000 consumers to get compensation
Bondi says the settlements are expected to provide payments for approximately 14,000 Florida consumers. To be eligible for a payout under the settlement, consumers must have borrowed from the lenders and paid back the principal plus 18% interest. Bondi says eligible borrowers will be officially notified when details are worked out.
At the same time, Western Sky and its affiliates are barred from collecting more than $15 million in outstanding loans made to Florida consumers.
Back in September a federal court ruled in a case involving the federal government and 16 states, that CashCall's business model did not provide an exemption from fair lending laws. The case was joined by the Consumer Financial Protection Bureau (CFPB), which had challenged CashCall's use of the “tribal model” to make and collect on loans in states that limit interest rates.
Western Sky stopped accepting loan applications in 2013 after tangling in court with a number of states. But CashCall continued to automatically withdraw payments from customers' accounts even though the loans were voided as a result of the state probes, according to an American Banker report.
Western Sky initially claimed immunity from state interest rate caps through its affiliation with the Cheyenne River Sioux tribe.