Western Sky Financial has been one of the most prominent and most successful lenders over the past couple of years. Desperate consumers continue to flock to the high-interest lender to obtain loans that they believe will somehow alleviate their financial situation.
Skeptical consumers often ask, “is Western Sky Financial legal?” Of course they are referring to the usurious interest rates charged that often exceed state usury limits where the consumer lives. While the rate itself is often actually illegal, what is really interesting is the illegal steps taken by the lender to obtain a judgment against those who fail to repay the nearly impossible to repay loans.
Forget about the fact that their advertisement claims “No cost to apply” even though a $75 loan origination fee is clearly revealed on the same page. Forget about the usurious interest rates charged by the lender that can run anywhere from 116.73% to 194.7% APR even though many states limit such rates to 35% APR.
None of these facts seem to count since Western Sky Financial, LLC claims it is only bound by the laws of the Cheyenne River Sioux Reservation. As a business based in the sovereign Native American reservation, Western Sky claims that it is not bound by Federal United States law. Maryland and Colorado are among several states to sue Western Sky Financial for violating state usury laws.
That is their basis for violating state usury limits. They claim they are not bound by the laws in those states and therefore may continue to provide the “illegal” loans so long as they are legal in the Cheyenne River Sioux Reservation. It is this assertion that is the basis for the defense of those who fail to repay the loans.
When you default on a Western Sky loan, Western Sky Financial will pursue normal collection activities and ultimately file for a judgment against you in the Cheyenne River Sioux Tribal Court. There is just one simple problem with this approach. The Cheyenne River Sioux Tribal Court has no jurisdiction over a non-tribal borrower living in South Carolina, California or any other location outside the reservation.
This problem was confirmed when the Federal Trade Commission sued Western Sky Financial for illegal garnishments. The FTC complaint asserted that Western Sky Financial scammed its customers through violations of the FTC Act. Furthermore, it claimed the Cheyenne River Sioux Tribal Court had no jurisdiction over non-member loans and therefore the judgments and subsequent wage garnishments were illegal.
In case you are asking how Western Sky Financial is legal, the answer is it is absolutely legal. Western Sky may charge whatever it wants and pursue legal action against any member of the Cheyenne River Sioux Tribe through the tribal court. Of course you may recognize that the vast majority of its loans are outside of the Cheyenne River Sioux Tribe, made to non-members who reside outside of the reservation. On that note, we can easily declare that Western Sky Financial’s activities are absolutely a scam.Tags: Financial, legal, scam, Sky, usury, Western