NBC 10's I-Team has uncovered the questionable practices of a loan company called Western Sky Financial.
The
company is run by an individual Sioux Indian, who is a member of the
Cheyenne River Sioux Tribe in Timber Lake, S.D. However, the tribe
claims it has nothing to do with Western Sky Financial.
The loan
company has been advertising on television and the Internet in more than
100 markets across the country. NBC 10 has also been running the ads.
Western Sky Financial offers "quick cash" loans, but charges exorbitant interest rates.
For
example, according to the company's website, an $850 loan carries and
interest rate of 342.86 percent, plus a $350 loan fee. The person
getting the loan has to agree to pay it off in 12 payments of $150 each.
That means that the $850 loan, will cost a person $1,800.
If you
take out a $10,000 loan, that loan carries an interest rate of 89.68
percent. It has to be paid off in 84 payments of $743.49 each-resulting
in a whopping $62,432 cost for the loan.
According to the Rhode
Island Department of Business Regulation, Western Sky Financial is not
licensed to do business in Rhode Island.
And the DBR says Rhode Island's usury rate for interest on loans is capped at 21 percent.
The
NBC 10 I-Team found that at least two states, Colorado and Maryland,
are suing Western Sky Financial for doing business in those states
without being licensed to do so.
The Federal Trade Commission has
two legal actions pending against the loan company, and the Better
Business Bureau gives Western Sky Financial an "F" rating.
Complaints
found online indicate that, in some cases, people are not able to pay
off the loans. According to the loan documents, Western Sky Financial
gets a Tribal Court Order to garnish the wages of the person who is late
in their loan payments.
There is some question about the legality
of the Tribal Court Order because the Cheyenne River Sioux Tribe is a
sovereign nation, whose laws don't pertain to U.S. citizens.
A
representative spokesman for Western Sky Financial said, "Western Sky
Financial operates out of the Sioux Indian reservation which is a
sovereign nation. We don't feel the laws and regulations of Rhode Island
apply to the company."
