Colorado Attorney General John Suthers has taken action against a national payday lender that has violated Colorado lending laws. Western Sky Financial provides payday loans with interest rates approaching 300%, yet it failed to obtain the necessary license to provide loans to Colorado residents above the 12% statutory limit.
Despite media reports that Western Sky Financial is owned by the Cheyenne River Sioux Tribe, the firm is actually wholly owned by tribal member Martin A. Webb. This time Webb has found himself named in the suit as its principal owner, and Colorado wants the firm to make things right.
Solvency Shark Stewart Pelto first uncovered Western Sky Financial’s smoke and mirrors marketing blitz. He was obviously stunned by the revelation from the spokesperson claiming “yes, it’s expensive.” While payday lenders subtly post their interest rates as required by the federal Truth in Lending Act, it is unusual for an advertisement to so candidly reveal that the loan is an expensive product.
Still, despite all of the candid advertising, the company still finds itself on the wrong side of the law. Colorado code requires that a lender obtain a license prior to offering any loan with an interest rate in excess of 12% APR. By failing to obtain a license, Western Sky Financial’s loans are in violation of Colorado’s Uniform Consumer Credit Code.
Over 200 loans were already made to Colorado residents, all of which are in violation of state law. Loans of $400 to $2,600 were made with terms ranging from 7 to 36 months.
This case represents an important legal challenge to the sovereignty of native American tribal companies. Several payday loan companies have recently become affiliated with tribal governments as a ploy to circumvent states’ payday lending laws. In this case, the lender Western Sky Financial is not actually owned by a tribe, but rather by an individual tribal member.
It is expected that owner Martin A. Webb will have to concede to laws that were broken in Colorado. However, you can bet that other payday lenders are closely watching in order to make sure they take the steps necessary to shield their firms from consumer protections. More importantly, they will be taking every precaution to attempt to hide behind tribal sovereignty as a means for evading consumer protections and bypassing state usury laws.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
Favorite quote:
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
Thomas Jefferson
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