LINCOLN, Neb. (CN) — Nebraska will accept $1.6 million to settle a predatory lending suit against CashCall and Western Sky Financial, which it accused of falsely claiming tribal affiliation to duck lending laws.
Attorney General Douglas Peterson said the state settled out of court the day after it filed suit in Lancaster County Court, in the state capital.
Defendants included Delbert Services Corp., J. Paul Reddam and Martin A. Webb.
"Nebraskans need to be protected from unscrupulous lending practices," Peterson said. "This settlement will provide relief for many of our hard-working citizens who were taken advantage of by predatory online lender."
The settlement requires the unlicensed loan companies to pay $950,000 in restitution, forgive $557,000 in debts, notify credit reporting agencies for credit history repair, and stop lending in Nebraska. The Nebraska Department of Banking and Finance will get $150,000.
Western Sky and its owner Martin Webb loaned money to more than 2,400 Nebraskans over the Internet, with annual interest rates of 89 percent to 342 percent, and illegal fees, the state said.
They tried to claim tribal immunity by saying their business was based on the Cheyenne River Indian Reservation in South Dakota, and told borrowers their loans were not subject to Nebraska lending laws.
Webb claimed to be a member of the Cheyenne River Sioux Tribe, but his business had no affiliation with and did not benefit the tribe, the state said.
Attorneys general in five other states sued CashCall on similar allegations, four times in 2013 and once in 2009.
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