The Connecticut Department of Banking reached a settlement with CashCall Inc., Western Sky Financial L.L.C. and Martin Webb, the owner of Western Sky Financial, for violating state law pertaining to small loan lenders. Banking Commissioner Howard F. Pitkin made the announcement.
In addition to providing restitution to affected borrowers, CashCall has paid a $350,000 fine “plus an additional $50,000 to the Department of Banking to encourage and help affected borrowers make their claims against the restitution fund” and to educate consumers about lending. The Department of Banking will help borrowers make their claims.
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 percent to 355 percent, well in excess of the 12 percent 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, Pitkin said in a statement. From at least March 2010 to April 2013, CashCall made approximately 3,800 such loans ”“ sometimes referred to as payday 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,” Pitkin said. “Borrowers won”™t have to go it alone; the Department of Banking stands ready to help them make their claim.”
Under terms of the settlement, CashCall, Western Sky and Webb must repay any interest in excess of 12 percent paid by the borrowers of the approximately 3,800 in-state loans.
The restitution fund will be managed by Dahl Administration L.L.C., which will contact eligible borrowers by June 16 and set up a website to allow consumers to file a claim for a refund or modification. The Department of Banking website, ct.gov/dob, offers details.
