A proposed class action lawsuit alleging illegal interest rates and consumer fraud was filed July 11, 2013 in United States District Court of South Dakota against an affiliated group of lenders: Payday Financial, LLC (d/b/a Lakota Cash and Big Sky Cash), Western Sky Financial, LLC (d/b/a Western Sky Funding, Western Sky, and Westernsky.com), Martin A. (“Butch”) Webb, and Cashcall, Inc. Attorneys Shawn Wanta and Christopher Jozwiak of Baillon Thome Jozwiak & Wanta LLP represent the four Named Plaintiffs: Chad Martin Heldt, Christi W. Jones, Sonja Curtis, and Cheryl A. Martin. The lawsuit challenges the defendants’ practice of charging high interest rates. In addition, the lawsuit alleges that the defendants’ marketing materials and loan documents are deceptive and misleading. The lawsuit involves plaintiffs from Minnesota, Texas, and Virginia and seeks class action status.
State usury laws are intended to protect consumers from being taken advantage of by lenders who can unilaterally establish the terms of the loan transaction. The complaint alleges that the companies marketed fast, accessible, low-barrier loans to consumers, preying upon individuals who needed access to money as quickly as possible in order to meet their most basic human needs. Furthermore, the Defendants charged astonishingly high interest rates knowing that people will do whatever it takes to provide food for their family or keep their home out of foreclosure—even if the measure would only last a short time. The lawsuit alleges that the defendants developed what they believe is a “legal loop hole” to state usury laws by requiring consumers to sign a loan agreement claiming the contract is “subject solely to the exclusive laws and jurisdiction of the Cheyenne River Sioux Tribe, Cheyenne River Indian Reservation.” Contrary to these representations, the loan agreement has nothing to do with Tribal law. The complaint seeks to apply United States laws to the case because Western Sky and its affiliates are South Dakota limited liability companies marketing and providing services to consumers throughout the United States, and thus cannot contract away their duty to follow the laws of each and every state in which they do business.
One of the plaintiffs, Christi W. Jones, borrowed $2,525 from Western Sky on July 19, 2011. The loan carried an APR of 139.13% and a fee of $75. Finance charges on the loan came to $11,441.37 for a total payment of $13,966.37 on a $2,525 loan. She has paid approximately $3,635.07 in interest and $45.20 in principal to date. The lawsuit seeks to end the defendants’ allegedly illegal scheme to skirt the law and make consumers whole again by returning money consumers paid to the defendants. At the time the proposed classes are limited to Minnesota, Texas, and Virginia residents.