West Virginia debtors have scored a victory against the Western Sky Financial tribal lenders. Attorney General Darrell McGraw entered into an agreement with Martin Webb and his company, Lakota Cash.
With interest rates that routinely dwarf the state’s statutory limit, 120 West Virginia residents entered into illegal loan agreements with Payday Financial. This ruling nullifies those loans, and the lender must refund all fees paid by those clients which are in excess of state lending caps.
Interestingly, the defendants in this case were 11th hour holdouts. They faced a contempt order for their steadfast insistence on tribal sovereignty. Instead, the firm voluntarily entered into an agreement with the attorney general rather than to risk setting a precedent that may be followed by other states.
The damage however, may already have been done. Western Sky Financial and the underlying payday lenders controlled by Martin Webb have already been on the radars of federal and state regulators. It is expected that the firm will continue to face increased regulatory scrutiny until ultimately it is forced out of business. As any consumer advocate knows, this could take years to occur.
Meanwhile, the thousands of desperate and less educated debtors that fall for the trap of easy money will continue to suffer. They will lose money through illegal fees. They may experience judgments that destroy their already damaged credit rating. Their employers may receive wage garnishment orders from tribal courts that have no jurisdiction over non-tribal members. The Federal Trade Commission sued Western Sky affiliates for illegally obtaining garnishment orders over non-tribal members.
If you have obtained a sky-high loan from Western Sky Financial or any related affiliate, you should contact your state’s attorney general. You may also need to contact a nonprofit credit counseling agency for help, since your financial situation may be in dire straits.
Webb’s companies in this case may have been wise to voluntarily agree to comply with West Virginia lending laws and provide refunds. Attorney General Darrell McGraw has a history of forcing compliance through heavy fines as well as by cancelling the debts of victims. With this agreement, the debtors must still repay the loans, although they may now do so through much lower interest rates.
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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