Connecticut Department of Banking Commissioner Howard F. Pitkin announced that a settlement has been reached with CashCall, Inc., Western Sky Financial, LLC and Martin Webb, the owner of Western Sky Financial, for violating Connecticut law pertaining to small loan lenders. In addition to providing restitution to affected borrowers, CashCall has paid a $350,000 fine. The Department of Banking will help borrowers make their claims against the restitution fund.
Following an investigation, the Department of Banking determined that CashCall offered unsecured short-term loans (consumer loans in amounts less than $15,000) with annual interest rates ranging from 89% to 355%, which is well in excess of the 12% maximum rate allowed by law for short-term, small dollar loans made without a small loan license. CashCall was not licensed to do this type of business in Connecticut. From at least March 2010 to April 2013, CashCall made approximately 3,800 such loans and received approximately $5 million dollars in excess interest payments from Connecticut residents.
“CashCall took advantage of Connecticut residents by charging wildly exorbitant interest rates on short-term loans, and the borrowers who fell victim to these illegal practices now have an opportunity to get back the money they overpaid,” Commissioner Pitkin said. “Borrowers won’t have to go it alone; the Department of Banking stands ready to help them make their claim.”
Under the terms of the settlement, CashCall, Western Sky and Webb must repay any interest in excess of 12% paid by the borrowers of the approximately 3800 Connecticut loans. The entities have paid a civil penalty in the amount of $350,000 plus an additional $50,000 to the Department of Banking to encourage and help affected borrowers make their claims against the restitution fund and educate Connecticut consumers about consumer credit lending.
The restitution fund will be managed by Dahl Administration, LLC, who will contact eligible Connecticut borrowers by June 16, 2014 and will set up a website to allow consumers to file a claim for a refund or modification.
Borrowers who want help making their claims should visit the Department of Banking website at www.ct.gov/dob, or call (800) 831-7225 to find out more.