EYEWITNESS LOCAL NEWSPAYDAY LENDER BATTLE
from Eyewitness News Online
West Virginia Attorney General Announces Agreement With Payday Lender
Reported by: Jeff Morris
Web Producer: Jeff Morris
Reported: Oct. 24, 2012 2:30 PM EDT
Updated: Oct. 24, 2012 2:57 PM EDT
Charleston , Kanawha County , West Virginia
Attorney General McGraw announced Wednesday the successful conclusion of a prolonged court battle with South Dakota-based Internet payday lender, Payday Financial and its owner, Martin Webb.
On the eve of the contempt hearing, Payday Financial and Webb signed an agreement with McGraw’s office promising to permanently refrain from making Internet payday or other exorbitant loans in West Virginia and paying $135,000 that will be distributed as full refunds of excess fees to 120 West Virginia consumers, according to a news release from the state Attorney General’s Office.
They also paid an additional $5,000 to the state of West Virginia that will be used for general consumer protection and other educational purposes.
Payday Financial did business as Lakota Cash. Webb claimed that the loans originated on the Cheyenne River Indian Reservation in South Dakota, where Payday Financial was located, and were subject to tribal laws rather than the laws of West Virginia or other states where the borrowers resided, the Attorney General's Office said.
After a court battle over enforcement of McGraw’s investigative subpoena, Kanawha Circuit Judge Duke Bloom ruled that Payday Financial was not an Indian tribe and therefore was not entitled to tribal immunity. He ruled that the loans were governed by West Virginia laws. Payday Financial challenged Bloom’s ruling by filing a petition with the West Virginia Supreme Court, which let the ruling stand.
Despite the Court order rejecting its claim of immunity and requiring it to comply with McGraw’s subpoena, Payday Financial still declined to do so, which led to contempt proceedings scheduled to be heard by Bloom on Oct. 11.
Meanwhile, McGraw also announced a recent settlement with another Internet payday leader, Cash-In-Advance of Florida, Inc., based in Ponte Vedra Beach, Fla. The settlement with Cash-In-Advance brought $20,951.46 in cash refunds and $4,378.61 in canceled debts for 71 West Virginia consumers.
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