AG Koster pulls plug on predatory lender in Missouri

Eight online payday loan sites have been ordered to shut down operations in Missouri, pay $270,000 in restitution and erase loan balances for Missouri consumers.

Martin A. "Butch" Webb acted through several business entities operating from a Native American reservation in South Dakota, none of which was licensed to do business in Missouri, Attorney General Chris Koster said in a news release.

The businesses, Payday Financial, Western Sky Financial, Lakota Cash, Great Sky Finance, Red Stone Financial, Big Sky Cash, Lakota Cash and Financial Solutions businesses sold short-term loans with exorbitant fees and forced consumers to agree to have their wages garnished without going through the court system as required by Missouri law, the release stated.

Koster's office received 57 complaints from consumers who collectively were charged about $25,000 in excess fees, and an investigation subsequently discovered as many as 6,300 other Missourians who also may have been charged excessive fees, according to the release.

"These predatory lending businesses operated in the shadows, taking advantage of Missourians through outrageous fees and unlawful garnishments," Koster said in the release. "Webb may have thought that by operating on tribal land he could avoid compliance with our state's laws. He was wrong."

Under Missouri law, a payday lender cannot charge "origination" or other such fees in excess of 10 percent of the loan, up to a maximum of $75.

The judgment obtained by Koster permanently prohibits Webb or any of his businesses from making or collecting on any loans in Missouri and cancels existing loan balances for his Missouri customers, the release stated. Webb also must instruct credit reporting agencies to remove all information previously supplied to them about specific consumers. In addition, Webb must pay $270,000 in restitution to consumers and $30,000 in penalties to the state, according to the release.

Consumers who, while living in Missouri, paid excess origination fees to one of the companies listed above may be eligible to receive restitution under the terms of the judgment. Koster's office will be contacting eligible consumers.

kwebster@semissourian.com

388-3646