Photo Credit: Holly McCoy
An important September 2013 ruling from the Iowa Department of Inspections and Appeals said that Western Sky Financial is subject to Iowa consumer laws.
Western Sky sells the loans it makes to WS Funding, a subsidiary of CashCall, which services all the loans made in Iowa by Western Sky.
The payday loans made by Western Sky can carry interest rates in excess of 135%.
Western Sky and CashCall had argued that since it was owned by a tribal member and located on a reservation.
Therefore, it was entitled to sovereign immunity and not subject to Iowa state laws.
Since Western Sky was not the Tribe itself and most of the transactions occurred off the reservation, Iowa laws controlled.
The judge said that since Western Sky solicited Iowa consumers to enter into loan agreements via the Internet it couldn’t hide behind tribal sovereign immunity.
If you’re having problems with Western Sky or another payday loan company connected with a tribe contact us about what might be done. Often, payday loan companies that consumers find online fail to obtain a license to operate in the state. If the company is not properly licensed in Iowa it should be prohibited from trying to collect loans. I have used that theory to object to claims from payday loan companies in Chapter 13 bankruptcies. By objecting to the claim the debt is discharged at the conclusion of the Chapter 13 without the company receiving any payment. Payday loans place consumers into a spiral of trouble but there may be options available to deal with their collection.
