Maryland Commissioner of Financial Regulation Issues Final Order Against Online Payday Lender


Western Sky Financial ordered to cease and desist

BALTIMORE, MD  (June 13, 2013) – The Maryland Department of Labor, Licensing, and Regulation’s (DLLR) Division of Financial Regulation announced today that it had issued a final order against Western Sky Financial. Mark Kaufman, the Commissioner of Financial Regulation, has ordered Mr. Martin Webb, the company’s owner, and other related parties to cease and desist from making unlicensed consumer loans and from collecting or attempting to collect on such loans previously made to Maryland consumers.

Western Sky advertises on television, and had originated loans via the internet to Maryland consumers. The Division of Financial Regulation previously issued a summary order to cease and desist in 2011, following complaints that revealed consumer loans with annualized interest rates ranging from a low of 120 percent to a high of more than 1,800 percent. Western Sky is not licensed in Maryland, and the rate on the loans far exceeds that allowed under Maryland law.

“At DLLR, we continue working to combat predatory lending practices and the risks posed by unlicensed creditors, lenders and collectors,” said Maryland Labor Secretary Leonard Howie. “I applaud the Division of Financial Regulation for their proactive work to defend Maryland’s consumers.”

Western Sky is located in Timber Lake, South Dakota, on the Cheyenne River Reservation, which is home to the Cheyenne River Sioux Tribe. The respondents claimed they were not required to abide by Maryland law due to tribal immunity. The Commissioner of Financial Regulation concluded that the business model employed by Western Sky and its related entities, did not entitle them to tribal immunity under relevant decisions of the U.S. Supreme Court. Western Sky and the other respondents maintain the right to appeal this order to the Circuit Court of Maryland.

“Western Sky and Mr. Webb sought to exploit the concept of tribal immunity to evade state law and to prey on vulnerable borrowers around the country,” said Commissioner of Financial Regulation Mark Kaufman. “Maryland has longstanding licensing requirements and interest rate limits for consumer lending that are intended to protect its citizens. We are committed to enforcing those protections. It is ironic that Western Sky has chosen to avoid lending on the reservation or even in the entire state of South Dakota, yet the company works feverishly to export its products to other states and disregards the protections to which their citizens are entitled.”

A copy of the order is available on the DLLR website (PDF document, 3.7MB, download Adobe Acrobat for free.

The Department of Labor, Licensing and Regulation protects and empowers Marylanders by safeguarding workers, protecting consumers, providing a safety net and cultivating a thriving workforce that can meet the demands of Maryland’s dynamic economy. Follow DLLR on Twitter (@MD_DLLR) and Facebook.