Olens’ suit targets firms as payday lenders

Western Sky Financial agreed in 2012 to stop offering payday loans to Georgians. But Attorney General Sam Olens said the practice never stopped, and the state has filed suit to put an end to the practice.

In addition to Western Sky, the state’s suit names the company’s owner, Martin A. Webb, and a related company, CashCall of Anaheim, Calif. Georgia banned payday loans in 2004.

“The defendants’ utter disregard for the law of this state will not be tolerated,” Olens said in announcing the suit that was filed Friday. “I have taken the necessary legal action to enforce the law and ensure that these unscrupulous lenders will no longer be able to exploit Georgia consumers.”

Payday loans are typically short-term transactions and high interest rates. Critics claim payday lenders exploit people with low incomes who can end up paying thousands of dollars in interest on a relatively small amount of principal.

Western Sky’s attorney was traveling Monday and was unavailable to comment. Webb did not return a telephone message. Officials with CashCall could not be reached for comment. Western Sky’s website says the company is not a payday lender but acknowledges annual interest rates of up to 342.86 percent.

The suit, filed in Fulton County, asks that the companies’ loans in Georgia be voided and that the firms be forced to pay a penalty equal to three times the interest or other charges levied to Georgia borrowers. A spokeswoman for Olens could not immediately say how many Georgians have been affected.

Western Sky, based in South Dakota, and CashCall are not licensed to loan money in Georgia yet continue to offer the high-interest loans in the state, Olens said.

Olens said Western Sky Financial funds the loans while CashCall services the loans and manages collection of payment. Then-Attorney General Thurbert Baker first contacted Western Sky’s attorney in 2010 based on a complaint about illegal payday lending. The company’s lawyer, Cheryl F. Laurenz-Bogue, responded that because the company is based on the Cheyenne River Indian Reservation and is owned by a Cheyenne Sioux tribal member, it is not subject to Georgia law.

Olens’ office, however, said courts have ruled against tribal immunity arguments in other cases.

By May 2012, Olens said, the company had agreed to stop offering loans in Georgia, an agreement Olens trumpeted to the media. But the company has continued to solicit customers in Georgia and stopped communicating with his office, Olens said.

A copy of Western Sky’s home page dated July 3, included in the lawsuit, has a list of states where the loans are not available. Georgia is not among them.

But Georgia was included in the prohibited states on the company’s home page on Monday. Yet, it continues to have another website specifically soliciting business from Georgians. That site features the Georgia flag and says state residents can apply for cash loans of $1,500 to $10,000.

Elena Parent, executive director of the consumer advocacy group Georgia Watch, said her organization regularly helps people who have taken out loans from Western Sky. Some of those affected signed up for the loans after Western Sky promised to stop offering them here.

One consumer had taken out a $5,000 loan with an APR of 116 percent, Parent said. The woman had already paid $2,000 and still owed more than $5,000.

“If she paid it through the life of the loan, she would pay over $42,000 over seven years,” Parent said.