NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a lawsuit Monday against multiple related lending companies and their principals for allegedly violating state usury and licensed lender laws related to internet lending.
Western Sky Financial LLC, CashCall Inc., WS Funding LLC and their owners, Martin Webb and J. Paul Reddam, allegedly charged annual interest rates of between 89 percent and 355 percent to thousands of consumers in New York. Interest rates in New York are limited to 16 percent for most lenders not licensed by the state. None of the companies named in the lawsuit are licensed in the state of New York.
"Western Sky and CashCall charged exorbitant interest rates on their loans to scam New Yorkers out of millions of dollars," Schneiderman said. "With this case and others, my office will continue to fight to protect New Yorkers from illegal business practices and stop companies that seek to prey upon consumers facing tough economic times."
The companies allegedly targeted New Yorkers through television and internet advertisements that promised fast cash to consumers. Since 2010, the South Dakota- and California-based companies made at least 17,970 loans to New York consumers, allegedly lending more than $38 million in principal with consumers owing more than $185 million in finance charges alone.
The lawsuit seeks a court order prohibiting the companies and individuals from engaging in illegal lending or enforcing existing usurious loan contracts, canceling all outstanding loans and requiring the payment of restitution for all New York loans that collected interest above the limit of 16 percent. The lawsuit also seeks the disgorgement of profits and penalties of up to $5,000 per violation for deceptive acts and practices.
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