Amid pressure from regulators, Western Sky Financial plans to close for business early next month.
The prominent online lender was one of several web-based payday loan shops that allegedly flouted New York's usury laws. Western Sky, which is owned by a Cheyenne River Sioux tribe, claims it operates on the tribe's South Dakota reservation.
Western Sky along with CashCall Inc. and WS Funding made roughly 18,000 loans to New Yorkers, doling out approximately $38 million in cash, according to the state's attorney general's office.
In a statement given at the time, Western Sky said, "we have complied with applicable laws in our business practices, and we stand behind those practices."
The lender went on to say that its practices "are governed by the laws of the Cheyenne River Sioux Tribe" and "beyond the purview of state regulation."
However, the Native American Financial Services Association, a group that advocates for tribes that offer lending services, says that Western Sky does not operate under tribal law, nor does it abide by Native American regulatory bodies.
"NAFSA sets the bar high for our members. Our member tribes follow all applicable tribal and federal laws and agree to abide by a strict set of industry-leading best practices to ensure that consumers can trust NAFSA members to honor their rights, protect their privacy, treat them fairly, and constantly strive to offer innovative financial products," said Barry Brandon, NAFSA's executive director, in a press release. "Western Sky Loans does not abide by these consumer-friendly practices, is not an enterprise wholly owned by a federally recognized tribe, is not regulated by a tribal regulatory lending authority, does not operate according to tribal law, and breaks the covenants meant to benefit tribal governments and their members."
Western Sky made its latest announcement on its website. In spite of the notice, the company offered no further details as to why it made its decision.