LIVONIA, Mich. (6/8/15)--Patrick McPharlin, director of the Michigan Department of Insurance and Financial Services, urged credit unions to help members who received unlicensed loans with illegally high interest rates through South Dakota-based predatory lender Western Sky Financial.
As many as 17,500 Michigan residents could be eligible for refunds from Western Sky because the company exceeded the state’s maximum interest rate rule, the Michigan Credit Union League reported (Michigan Monitor June 5).
The state of Michigan negotiated a $2.2 million settlement with Western Sky and California-based CashCall Inc. The settlement will automatically reduce the interest rate on all loans owned by Western Sky and CashCall to Michigan’s legal rate of 7%. Additional relief will be available for consumers who file a valid claim.
Western Sky assigned the loans it made to Michigan consumers to CashCall Inc. which serviced and collected the loans directly or through its affiliates. Interest rates charged on Western Sky’s Internet-based loans ranged from 89% to 169%, exceeding both the 7% interest rate legally permitted for unlicensed lenders and the 25% interest rate legally permitted for licensed lenders.
Western Sky also charged processing fees of up to $500 on numerous loans, exceeding the $300 cap allowed for licensed lenders.
To receive refunds, those who took out the loans must file a claim with Western Sky, McPharlin said. Credit union employees can watch for Western Sky if it appears on members’ credit reports and assist them in filing claims.