It was September 2010 when I first wrote about the loan sharks over at Western Sky Financial who promise financial freedom for those saddled with the need for quick cash. A cursory review of the terms and conditions of these payday loans revealed interest rates that would make Vito Corleone’s stomach upset. 100, 200, 300% interest rates would certainly seem outrageous, if it weren’t for the help offered on this original iva site. But for those who need cash in a desperate way, the high interest rates that Western Sky is tacking on may be acceptable for those in a pinch.
As I originally wrote, those who apply and accept a loan from Western Sky agree to terms that may leave some scratching their heads:
“All loans will be subject solely to the exclusive laws and jurisdiction of the Cheyenne River Sioux Tribe, Cheyenne River Indian Reservation. All borrowers must consent to be bound to the jurisdiction of the Cheyenne River Sioux Tribal Court, and further agree that no other state or federal law or regulation shall apply to this Loan Agreement, its enforcement or interpretation.”
What protection applies for those who take one of these loans?
New York State seems to have that same question. The state recently filed suit against Western Sky accusing them of violating the state’s usury laws that put 25% interest rate cap on loans. The suit was filed in order to protect consumers in the state from getting taken by Western Sky and their high rates. But if one willingly enters into one of these loans knowing that their interest rate is going to be an insane amount, is there something that can be done about it.
Let’s face it. Chances are the people applying for a high interest loan have already exhausted every other means of obtaining cash without having to sell a kidney. With companies like Western Sky as their last resort, is there something wrong with charging interest rates that are in the triple-digits? I can only imagine that the majority of the loans Western Sky is handing out have a high default rate which is their justification for the high interest they charge.
New York may argue against that. According to the New York Times article, Eric T. Schneiderman, the New York State attorney general who filed suit against Western Sky, said that since 2010 nearly 18,000 New Yorkers took out loans with the tribe that resulted in an estimated $185 million in interest and fees.
Hats off to the state of New York for at least attempting to clamp down on these predatory lenders. Whether they will succeed in their efforts or not is yet to be seen.