The payday loan industry is well known for their exorbitant interest rates. Companies have long gotten away with charging these kinds of rates because people are in such need of money in certain emergency situations. With no other lender willing to take on such risk, the payday loan industry has been able to thrive. Some may consider them to be predatory practices, but most people just consider them to be useful for the poorest of people that need help. The government has stepped in as many times as necessary to help regulate the issuing of interest rates and payday loans, but recently they have stepped in even further. The Western Sky company has been sued for charging high interest rates that exceed 350%.
Western Sky Federal Lawsuit
As with many other payday loan lenders, the Western Sky company is based out of South Dakota and provides lending services to a wide variety of people across the country. Lately, they have been able to charge interest rates that exceeded 350%, which was too much for many federal prosecutors to handle. A lawsuit has been filed in mid August by a New York court. They consider the interest rates to be too high and often are not forgiving when it comes to these companies.
An analysis of some of the Western Sky terms and conditions has made its way to the New York prosecutors where they have been touted as one of the reasons for the lawsuit. For example, a loan of $10,000 that someone can get in a single day without any collateral can often cost up to $62,500 over the lifetime of the loan. These types of rates on such high dollar amounts can end up leaving residents with no money for decades.
What Will the Lawsuit Change?
One of the things that lawmakers and the public are hoping is that the lawsuit will change the way Western Sky and other lenders are forced to market themselves. They cannot continue to market themselves in such a deceitful way and more importantly, they cannot have fine print that ends up charging people such a high rate of interest.
The lawsuit will not be completed for many years, but the act of filing one from the New York court has serious implications for those who are involved in the payday loan industry. Many are hoping that the issue gets resolved quickly and quietly, but the general public is a little more interested in the outcome.
With so many people needing financial assistance with this terrible economy, it is no wonder that people are looking forward to hearing the result of this lawsuit. There are many reasons to be concerned about the payday loan industry, but whether the government can force them to provide a service that the market is demanding is another story. It remains to be seen whether or not it is going to be valuable for the government to make such a move on the Western Sky payday loan company in South Dakota.
