Like any other industry, the short term lending industry is filled with a wide variety of companies. By and large, most payday lending companies operate in an ethical manner and have good business relationships with their customers. However, there are always times when some lenders get called out for suspect behavior. In Michigan there are quite a few consumers who are crying afoul about being duped by high loan fee charges and potentially illegal practices implemented by CashCall and Western Sky Financial. These consumers should be getting refund checks at the beginning of October. This is all part of a recent multimillion dollar legal settlement.
In all, more than 6,500 Michigan residents put in claims that went to the administrator for this particular settlement fund. Official notices were sent out to these folks with the potential for claims being filed between June 29 and September 18. These folks had to mail in their claim by September 18.
State officials stated that it was difficult to put together estimates for each individual borrower’s refund check. The amount of each refund will be calculated by determining the exact amount of money that each borrower paid on their loan. The total of $2.2 million is set to be divided equally – as individual percentages – among all of the people who filed claims prior to the September 18 cutoff. The state claims that the lending companies charged excessive fees and made borrowers responsible for higher rates. An example that the state provided estimated that someone who took out a loan from Western Sky for $1,000 would wind up repaying over $4,000 over the two year loan term.
The final claim details were announced by Michigan Department of Insurance and Financial Services Director Patrick McPharlin and the state Attorney General in Michigan Bill Schuette. It is possible that relief from the settlement could include a refund, the reduction of the borrower’s balance or even a complete cancellation of all money due on the loan. It is estimated that the entire balance of these loans added up to over $15 million. The value placed on reduced/modified loans totaled up to a balance of $6.85 million. As was stated earlier, the total refund amount adds up to $2.2 million.
Consumers who submitted their claims are being told to keep an eye on their mailbox for the refund checks this week. Borrowers are also being told, however, that they should be aware of other potential scams related to this settlement, and that they should not fall for any notices to make payments to receive their settlement checks. It appears that some scammers are essentially phishing to get consumers to send in money to get their checks. If any of these Michigan consumers get contacted by any of these unscrupulous parties, they are encouraged to report the suspicious activity to officials.
Schuette issued a statement, saying, “The Legislature enacted interest rate limits on various types of loans to protect Michigan consumers, and we will not tolerate attempts to circumvent those laws and exploit our citizens.” The Michigan regulators said that Western Sky issued loans that had interest rates that could add up to 169 percent. Without more information on this case, it is hard to determine whether or not these lending companies were crossing the line. However, this situation should remind consumers to make sure that they deal with lenders who offer fair rates and that are known for being trustworthy financial providers, either online or in their communities.