Missouri Attorney General Chris Koster reached an agreement with the operator of online payday loan operations, effectively shutting them down in Missouri and requiring customer restitution.
Martin, aka Butch, Webb operated the business entities from a Native American reservation in South Dakota under the names Payday Financial, Western Sky Financial, Lakota Cash, Great Sky Finance, Red Stone Financial, Big Sky Cash and Financial Solutions. The companies - which weren’t licensed to do business in the Show-Me State - sold short-term loans with high fees and required consumers garnish their future wages without going through the court system, a violation of Missouri law, according to a news release.
Missouri law prohibits payday lenders from charging an origination or other such fees in excess of 10 percent of the loan - up to a maximum of $75. In one case, a consumer was charged a $500 origination fee on a $1,000 loan, which was immediately rolled into the principal, as well as a 194 percent annual percentage rate, causing the bill to exceed $4,000.
Koster’s office received 57 complaints from consumers collectively charged roughly $25,000 in excess fees. His investigation found as many as 6,300 other Missourians may have been charged excessive fees through Webb’s companies, according to the release.
“These predatory lending businesses operated in the shadows, taking advantage of Missourians through outrageous fees and unlawful garnishments,” Koster said in the release. “Webb may have thought that by operating on tribal land he could avoid compliance with our state’s laws. He was wrong.”
The judgment obtained by Koster’s office also erases all loan balances owed by Missouri consumers to Webb’s companies. He also must pay $270,000 in restitution and $30,000 in penalties, the release said.[[In-content Ad]]
