ATLANTA (CN) - Payday lenders Western Sky Financial and CashCall illegally sack customer's bank accounts and abuse their victims with obscene language, threats, and phone calls "at all hours of the day and night," Georgia's attorney general claims in court.
The payday lenders are not licensed in Georgia, but they collaborate in a "common enterprise" to peddle high-interest, fee-laden loans via TV ads and the Internet, topped off with abusive collection practices, Georgia says.
The attorney general sued the companies and Western Sky CEO Martin A. Webb, in Fulton County Superior Court.
Western Sky, a South Dakota corporation, and CashCall, of Los Angeles, are not licensed "to make, offer, arrange, or act as an agent in the making of loans of $3,000 or less to consumers in the State of Georgia," the attorney general says.
They also charge interest rates far higher than the state limit of 10 percent.
"Plaintiff continues to receive a substantial number of consumer complaints regarding Western Sky's payday loans, including that Western Sky continues to electronically withdraw funds from consumers' bank accounts to collect high-interest payments even though the consumers have repaid the full amount of the principal on the loan," the attorney general says in the lawsuit.
"Consumers have reported that CashCall representatives are harassing them with repeated telephone calls at all hours of the day and night, using obscene and abusive language over the telephone, threatening consumers with wage garnishment or other legal action, calling consumers' employers to threaten wage garnishment or other legal action and other forms of intimidation."
The complaint adds: "Within approximately three to five business days after the loan is funded by Western Sky, the loan is assigned or sold to defendant CashCall. CashCall remains the servicer of the loan and manages the collection of payments. ...
"(W)hen a consumer applies for a loan via Western Sky's website or toll-free telephone number, the application is received and processed by representatives of CashCall. Thus defendants collaborate in all aspects of the loan-making process."
True annual percentage rates of the loans can be as high as 184 percent, the complaint states.
The attorney general says that in November 2010his office sent a cease-and-desist letter to Western Sky, which responded that it would not stop lending in Georgia.
Western Sky claimed to be owned by a member of the Cheyenne tribe, and therefore immune from state law.
After a second cease-and-desist letter in 2012, which included an order from a Denver judge, Colorado ex rel Suthers v. Western Sky LLC and Martin Webb
, rejecting Western Sky's tribal immunity arguments, the defendants responded, through counsel: "My client has decided to cease making any payday loans in the State of Georgia. A disclaimer has been added to the state pull down on the business websites specifically stating that his payday loans are not available to residents of the State of Georgia. The decision was fully effective May 10, 2012," according to the complaint.
But in December 2012, the defendants were still selling loans in Georgia, and no disclaimer had been posted on the websites, which still listed Georgia on pull-down menus, the attorney general says.
Georgia seeks a permanent injunction enjoining defendants from selling, advertising or soliciting loans of $3,000 or less by mail, email, the Internet or phone in Georgia, civil penalties, and all of their illegal loan transactions declared null and void.