I-Team: Western Sky Financial's practices called into question
NBC 10's I-Team has uncovered the questionable practices of a loan company called Western Sky Financial.
The company is run by an individual Sioux Indian, who is a member of the Cheyenne River Sioux Tribe in Timber Lake, S.D. However, the tribe claims it has nothing to do with Western Sky Financial.
The loan company has been advertising on television and the Internet in more than 100 markets across the country. NBC 10 has also been running the ads.
Western Sky Financial offers "quick cash" loans, but charges exorbitant interest rates.
For example, according to the company's website, an $850 loan carries and interest rate of 342.86 percent, plus a $350 loan fee. The person getting the loan has to agree to pay it off in 12 payments of $150 each. That means that the $850 loan, will cost a person $1,800.
If you take out a $10,000 loan, that loan carries an interest rate of 89.68 percent. It has to be paid off in 84 payments of $743.49 each-resulting in a whopping $62,432 cost for the loan.
According to the Rhode Island Department of Business Regulation, Western Sky Financial is not licensed to do business in Rhode Island.
And the DBR says Rhode Island's usury rate for interest on loans is capped at 21 percent.
The NBC 10 I-Team found that at least two states, Colorado and Maryland, are suing Western Sky Financial for doing business in those states without being licensed to do so.
The Federal Trade Commission has two legal actions pending against the loan company, and the Better Business Bureau gives Western Sky Financial an "F" rating.
Complaints found online indicate that, in some cases, people are not able to pay off the loans. According to the loan documents, Western Sky Financial gets a Tribal Court Order to garnish the wages of the person who is late in their loan payments.
There is some question about the legality of the Tribal Court Order because the Cheyenne River Sioux Tribe is a sovereign nation, whose laws don't pertain to U.S. citizens.
A representative spokesman for Western Sky Financial said, "Western Sky Financial operates out of the Sioux Indian reservation which is a sovereign nation. We don't feel the laws and regulations of Rhode Island apply to the company."