Supreme Court rules against internet payday lenders

[private]The Georgia Supreme Court issued a decision Monday that will enable the state attorney general’s office to proceed with a lawsuit against out-of-state, internet payday lenders.

The court unanimously denied the lenders’ motion to dismiss the case and said they will be required to deposit more than $15 million into the court’s registry, which represents the amount they have collected from Georgia borrowers.

The case involves Western Sky Financial, a Native American tribal internet lender based in South Dakota; Martin A. Webb, Western Sky’s sole shareholder and a member of the Cheyenne River Sioux Tribe; CashCall Inc., which hosted Western Sky’s website; and Delbert Services Corp., which helped Western Sky service the loans.

Attorney General Sam Olens filed a complaint against the defendants in July 2013 that alleged they violated state law prohibiting payday loans, which generally are high-interest loans of $3,000 or less.

A trial court judge subsequently issued an injunction that prohibited Western Sky and the others from making unsecured loans of $3,000 or less and restrained CashCall and Delbert from transferring to third parties the servicing rights on $3,000 loans made to any Georgians.

The court also ordered the defendants to deposit $200,000 into an escrow account, an amount that was later increased to $15,279,762.95.

The Supreme Court rejected the lenders’ argument that they are excluded from state law because they are from out-of-state and the loans involve interstate commerce.

The Supreme Court also turned down the argument that tribal sovereignty precludes jurisdiction over the matter (Webb claims to be a Native American and owns Western Sky).

“We hold that this State’s jurisdiction is not defeated by tribal sovereignty,” the court said. “‘Absent express federal law to the contrary,’ Native Americans who conduct activities beyond reservation boundaries are generally subject to non-discriminatory civil and criminal laws.”

© 2016 by The Georgia Report

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Tags: Georgia Supreme Court , payday lenders , Sam Olens