A Victory for Georgia Consumers in Western Sky

Yesterday, the Supreme Court of Georgia ruled in favor of Georgia consumers. In Western Sky Financial, LLC v. State of Georgia, three online payday lending companies, incorporated in different states, provided payday loans to Georgia residents. Georgia Attorney General Sam Olens sued the companies in 2013 alleging the illegal collection of principal and interest on unlawful loans made to Georgia consumers, arguing that anyone offering loans within the state must follow its laws. The three companies argued that the loans were not illegal because the companies were based out of state and not subject to the restrictions imposed by Georgia law. In a victory for Georgia consumers, the Supreme Court decided with the Attorney General’s reasoning and concluded that Georgia’s Payday Lending Act prohibits online payday lenders from offering these predatory products in the state. According to the Attorney General, these companies had collected $15 million from borrowers since the start of litigation. The Supreme Court upheld the trial court’s injunction ordering Western Sky, Delbert Services, and CashCall to deposit all of this money into the registry of the Court and required quarterly deposits of any additional money collected from Georgia borrowers in the future to satisfy an anticipated final judgment in favor of the state.

The Georgia Supreme Court also reversed the trial court’s decision denying the state’s request to add two more parties to the lawsuit, Reddam and WS Funding. Reddam is the sole owner of CashCall, and WS Funding is a wholly owned subsidiary of CashCall. This will allow the Attorney General to hold these parties accountable for this illegal activity as well.

Additionally, in more good news for consumers, the Court decided that the statute of limitations for the Payday Lending Act will be governed by the 20-year statute of limitations set forth in OCGA § 9-3-1, instead of the one-year limitation period for forfeiture actions under the current usury laws.

You can hear Liz Coyle, Georgia Watch’s Executive Director, discuss this decision with WABE 90.1 here.

Georgia Watch is committed to protecting the financial interests of consumers and will follow and report on any further action regarding payday loans.  We want to congratulate and again recognize the important work of Attorney General Sam Olens, our 2016 Consumer Champion in Financial Protection, for pursuing this impactful case.