Monday, December 12, 2011
Help Me Howard: 139% Interest Loan
What is the most interest you would be willing to pay on a loan? 10%-15%? How about 139% interest? No way you say, that has to be illegal. But it's what some Floridians are paying and are wondering what they can do. So they called Help me Howard with Patrick Fraser.
WSVN -- When Walter Bells granddaughter was a teenager, he wanted her to be able to handle her own finances when she was on her own.
Walter Bell Jr, Shocked by Interest Rate: "One of the things I stressed was credit is a dangerous avenue to travel."
Walter knew the financial pitfalls a person could face in life. Taraya listened but didn't expect to have one so soon.
Taraya Bell, 139% Interest Rate: "Cause I took out the loan to help what I thought was making an adult decision paying off my little credit cards and debts and starting fresh."
Taraya saw this ad on a cable channel from Western Sky which says they are a Native American owned business operating on a Native American reservation.
Taraya Bell: "No late fees, no high payments, no high interest."
Within an hour the $2,500 was in Taraya's bank account and for the next two years the monthly payments were withdrawn from her checking account. Then then one day Walter saw her upset.
Walter Bell Jr: "As she come home from work and she be looking sad and sometimes crying. So I finally got her to fess up what the reason was."
Taraya told Walter about the $2,500 loan, then told him what she says she was not told when she borrowed the money- the interest rate she was paying.
Taraya Bell: "I did not see anything about 139% interest."
You heard her right. Taraya was paying 139 percent interest on the loan.
Walter Bell Jr: "I almost passed out. I couldn't believe it."
Walter contacted Western Sky and got the paperwork. Taraya had agreed to the loan over the internet and says she had never seen this document, that showed her $2,525 loan at 139% interest would cost her $11,015.
Taraya Bell: "I got the loan to fix problems and now they are part of that problem and it's sad because I trust them. The guy was super nice on the phone and he sounded very trusting."
Walter contacted the company again, reminded them that Taraya had paid back the $2,500 plus some and would not pay this 139% interest anymore.
Walter Bell Jr: "I cant believe that's legal in the united states."
Walter says a Western Sky employee told him they could charge 139% and more because the U.S. government has no jurisdiction over the reservation.
Walter Bell Jr: "How can the United States say we have a separate nation within the United States that operates outside of our requirements and our laws and regulations?"
Well Howard, Western Sky's website says they can charge from 116%-139%, even 234% for their loans. So is that legal to do even if you are operating on an Indian reservation?
Howard Finkelstein: "If Taraya had gone to the reservation to borrow the money, it would probably be legal. But Western Sky is using the Internet and telephone to come into Florida, where the highest interest rate on this type of loan is 30%. So this loan is illegal in Florida."
I called Western Sky at least 10 times. Each time they politely told me they would have someone call me back. No one ever did.
At the Indian reservation, a tribe member who did not want to be identified said they were upset that a member of the tribe was running this company from there, but they could not stop him.
Florida's Department of Financial Regulation told me Western sky is not licensed in Florida.
In Colorado the attorney has filed suit against Western Sky for basically loan sharking. That case is now in court.
Howard Finkelstein: "Now that Taraya has repaid the amount she borrowed, she was smart to stop the payments because this could force Western Sky to go to court in Florida and I believe a judge will rule the contract is illegal and she does not have to continue to pay this outrageous interest."
Taraya thought she was following her grandfather's financial advice, but now realizes she got caught by the kind of people he warned her about.
Taraya Bell: "I'm going to get rid of my debt and starting fresh and all I ended up doing was the complete opposite."
Patrick Fraser: "In Florida, if you charge 139% on a consumer loan, the state considers that a felony and you can go to jail. Florida's Office of Financial Regulation told us if this has happened to you, file a complaint with them so they can investigate."
Got a problem you want to loan to somebody? Need to borrow a lawyer? Contact us. Our interest in you is high but it won't cost you a dime.
CONTACT HELP ME HOWARD:
Florida's Office Of Financial Regulation
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