ATLANTA -- Georgia Attorney General Sam Olens has filed a lawsuit against Martin A. Webb, Western Sky Financial, LLC and CashCall, Inc., demanding that the so-called "payday" lenders immediately cease doing business in Georgia.
Olens' office claims that in making such loans, which are issued through Internet websites, the companies are in violation of Georgia law.
"The law is clear that payday lending is illegal in Georgia," Olens said. "The defendants' utter disregard for the law of this state will not be tolerated."
According to Olens, the companies are not licensed in Georgia, but are making loans to Georgia consumers at "crushing" interest rates of up to 340 percent which trap the borrower in a "cycle of debt."
A statement issued by the Georgia Department of Law cites an example of a consumer borrowing $2,600. at 340 percent would pay more that $14,000 in principal and interest over the life of the loan.
The Georgia Attorney General's Office and the Governor's Office of Consumer Protection claim to have received numerous complaints regarding Western' Sky's payday loans, including that the company continues to electronically withdraw funds from consumers' bank accounts to collect payments even after the loans have been repaid. Harassing, abusive and even threatening phone calls have also been reported, officials say.
The complaint, filed in the Superior Court of Fulton County, asks the court not only to prohibit the defendants from making payday loans in Georgia but also to declare any pending loans null and void and enjoin defendants from further collection of payments, officials say.