Short-term lending violation nets $5.4 million settlement
The state announced today a $5.4 million settlement with two companies and an entrepreneur over violation of Connecticut lending laws.
Banking Commissioner Howard F. Pitkin said that CashCall Inc., Western Sky Financial LLC and Martin Webb, owner of Western Sky, had been cited for offering short-term loans to consumers with interest rates of up to 355 percent annually — far above the maximum 12 percent rate allowed under state law for short-term, small-dollar loans offered by companies without a license to do business in the state.
“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.
The state Banking Department said CashCall made about 3,800 illegal loans in Connecticut over a three-year period. Residents were estimated to have paid an excess $5 million in interest payments over that time.
The state’s settlement with CashCall, Western Sky and Webb calls for the three to repay to consumers any interest money above the 12 percent legal limit. In addition, the parties agreed to pay a $350,000 civil penalty and an additional $50,000 to the state to help identify and help borrowers make their claims for restitution, as well as to educate residents about consumer credit ripoffs.
Restitution money will be managed by Dahl Administration LLC. Borrowers eligible for reimbursement should be contacted by June 16 and be able to file a refund claim over the Internet.
For additional more information, visit the Department of Banking website at www.ct.gov/dob or call (800) 831-7225.
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