On Friday, July 26, 2013, Attorney General Sam Olens filed a lawsuit against Martin A. Webb, Western Sky Financial, LLC (Western Sky) and CashCall, Inc. demanding that the payday lenders immediately cease doing business in Georgia. The Attorney General’s office alleges that the companies make illegal payday loans in Georgia through websites that they operate. The Pay Day Lending Act, a Georgia law, specifically prohibits the making of payday loans, including the making of payday loans to Georgia residents through the Internet (O.C.G.A. § l6-17-1, et seq).
“The law is clear that payday lending is illegal in Georgia,” said Olens. “The defendants’ utter disregard for the law of this State will not be tolerated. 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.”
Although the defendants are not licensed to lend in Georgia, they still make high interest payday loans to Georgia consumers over the Internet. These loans carry crushing interest rates of up to 340% and trap the borrower in a cycle of debt. For example, a consumer borrowing $2600.00 from the defendants will ultimately pay over $14,000.00 in principal and interest over the life of the loan.
The Georgia Attorney General’s Office and the Governor’s Office of Consumer Protection have received numerous complaints regarding Western Sky’s payday loans, including that Western Sky continues to electronically withdraw funds from consumers’ bank accounts to collect high interest payments even though the consumers have repaid the full amount of the principal on the loan. There have also been a large volume of complaints about CashCall’s collection practices. Consumers have reported that Cash Call representatives have harassed them with repeated telephone calls, obscene and abusive language, threats of wage garnishment or other legal action, and even going so far as to call consumers’ employers to threaten wage garnishment.
Prior to filing suit, the Attorney General’s Office made numerous attempts to resolve the issue outside of court. In May 2012, Western Sky agreed in a letter to the Attorney General to stop making payday loans in Georgia and to add a disclaimer to its website stating that the payday loans are not available to Georgia residents. However, since that time, Western Sky has continued to offer and make such loans in Georgia and has not responded to correspondence from the Attorney General’s Office on the matter.
Investigation revealed that Western Sky and CashCall collaborate in the offering, making and collection of payday loans to consumers in Georgia. Western Sky Financial is owned and operated by Webb. CashCall acts as the servicer of the loans and manages the collection of payments. CashCall also offers payday loans which are funded by Western Sky.
In addition to asking the court to prohibit the defendants from making payday loans in Georgia, the Attorney General is seeking that the court declare any pending loans null and void and enjoin defendants from further collection of payments. The complaint also seeks civil penalties and attorneys’ fees.