DENVER (Legal Newsline) - Colorado Attorney General John Suthers filed a lawsuit Monday against two online consumer loan servicing companies, a collection agency and the companies' principal for allegedly operating illegally in Colorado.
CashCall Inc., WS Funding LLC, Delbert Services Corporation, a collection agency, and J. Paul Reddam, the companies' principal, allegedly made loans to approximately 5,000 Colorado consumers with annual percentage rates ranging from 90 percent to higher than 350 percent. The defendants' loan servicing and collection activities allegedly violate the Colorado Fair Debt Collection Practices Act, the Colorado Consumer Protection Act and the Colorado Uniform Consumer Credit Code.
"Today, Colorado is collaborating with other states and the Consumer Financial Protection Bureau to crack down on unscrupulous and abusive online lenders," Suthers said. "This is the unveiling of a new state and federal strategy to stop predatory lenders. A seven-year, $10,000 loan cost consumers more than $50,000 in finance charges and because the loans are not legal, they are also not valid."
Suthers' lawsuit alleges that CashCall, through its wholly-owned subsidiary, WS Funding, started working with Western Sky Financial LLC, allowing consumers to apply for loans directly through Western Sky's website. Suthers' office filed a lawsuit against Western Sky in 2011 for allegedly violating state consumer protection and usury laws.
Suthers' lawsuit against CashCall and its affiliates joins similar actions filed against the defendants by attorneys general in Indiana, New Hampshire and North Carolina. The CFPB also filed a lawsuit against the defendants for allegedly violating the Dodd-Frank Act.