New York Attorney General Eric Schneiderman sued an online lender with ties to an American Indian tribe and its affiliates Monday, alleging that they charged interest rates to low-income New Yorkers that were more than 10 times higher than state law allows, the Wall Street Journal reported today. Schneiderman accused Western Sky Financial LLC and its affiliates, WS Funding LLC and CashCall Inc., of acting "in concert" in an alleged scheme to make loans at more than 355 percent annual interest. The lawsuit poses a key test for regulators who have begun cracking down on online lenders, including those affiliated with Indian tribes. Government officials say the lenders are violating state interest-rate caps and consumer-protection laws, but tribes say they are immune because they operate as sovereign governments.
