Michigan borrowers to get loan refunds after settlement
Thousands of Michigan residents are entitled to their share of a multi-million dollar settlement with lending companies who issued illegal, high-interest loans, according to the state’s Attorney General’s Office.
The terms of the May 6 settlement with South Dakota-based Western Sky Financial and California-based CashCall were announced Thursday by Attorney General Bill Schuette and Michigan Department of Insurance and Financial Services (DIFS) Director Patrick McPharlin.
A total of $2.2 million will be refunded to Michigan borrowers who filed valid claims, officials said. The checks should be mailed by Oct. 2.
In addition, the settlement involves more than $15.7 million in canceled loan balances, more than $6.8 million in modified or reduced balances, and a significant amount saved through an automatic switch to a 7 percent interest rate going forward.
In total, officials said the settlement is valued at more than $24.7 million.
“Michigan will aggressively pursue any businesses that try to make illegal, high-interest loans to Michigan consumers,” Schuette said. “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.”
McPharlin said the settlement represents a crack down on predatory loans with high interest rates.
“These high-interest, unlicensed loans with interest rates of up to 169 percent and APRs over 350 percent took advantage of Michigan consumers,” McPharlin said. "This settlement also serves as an important reminder to only do business with licensed lenders that follow Michigan law, and to contact DIFS if you have any questions about a lender’s credentials.”
Western Sky Financial offers quick approval payday loans online, with a 99 percent instant approval rating advertised on its website. Borrowers can get up to $1,000 cash within 24 hours, according to the company.
Information on the settlement was mailed in June to all Michigan residents who took out Western Sky loans, officials said. The packages included a Sept. 18 deadline to file a claim, the settlement terms, and additional relief available.
Depending on a borrower’s circumstances, relief options included a refund from the $2.2 million settlement, a reduction of their loan balance with interest going forward reduced to 7 percent annually, or a complete cancellation of their loan balance.
More than 6,500 residents filed a claim for the settlement, officials said, accounting for about 42 percent of total possible claims. Those deemed eligible for relief have been notified of their status.
“Borrowers who received such a notice should watch their mail for their refund check, and be vigilant for scams by remembering that you do not need to pay anyone or take any further action to receive your refund,” officials said in a statement.
■ If you filed a claim and have questions about your refund check, loan modification, or loan cancellation, or if you have other questions about the settlement or claim process, please contact the Settlement Fund Administrator at 1 (866) 336-5756 or visit the settlement website here.
■ If you have additional questions about the Western Sky settlement, or if you would like information or have a complaint about another lender or loan, please contact DIFS at 1 (877) 999-6442 or visit the DIFS website here.