Experian Settles In Class Action Lawsuit With Payday Loan Borrowers, Settlement Set At $24 Million | Credit Raters post

Experian Settles In Class Action Lawsuit With Payday Loan Borrowers, Settlement Set At $24 Million

06 Jan 2020
Approx Reading time: 3 minutes
  • The class-action lawsuit was brought forward by 56,000 Americans, claiming Experian’s actions had damaged their credit rating.
  • The settlement will be given out if and once it is approved in the final hearing scheduled on 27th January 2020.
  • The lawsuit involves Western Sky Financial, a lender widely accused of being involved in predatory and illegal lending practices.

Experian has reached a settlement agreement on its class-action lawsuit involving 56,000 Americans. The settlement amount has been set at $24 million.

The lawsuit had been filed back in 2016 by a woman residing in Gwinnett County. She had alleged that her credit report had been damaged due to delinquency caused by a company called Western Sky Financial. According to the office of the Georgia Attorney General, the company, which is based in South Dakota, gave out over 18,000 loans in the Georgia region, charging interest rates of up to 340%.

Preliminary approval had been sought for the settlement by the lead plaintiff’s attorneys on December 31st. This approval has now been granted and 27th January has been set as the date of hearing.

According to the charges presented in the lawsuit, Experian did not stop reporting on debt from Western Sky Financial, even though the company had been discredited publicly for predatory lending practices. This goes against the Fair Credit Reporting Act, although Experian argued in the settlement filing that no evidence had been found by the judge that could prove Experian willfully chose to not comply with the legal requirements of the Act.

If the court approves the settlement after the conclusion of the hearing, it is expected that Experian would be setting up a website for the claims and help the victims during the settlement collection process.

The lending practices of Western Sky in the state of Georgia have been under scrutiny over the past decade. In the past, three attorney generals in Georgia have come after the company, accusing it of illegal and predatory lending practices. Over 10,000 loans were voided back in 2013 when the company had been pursued by both state and federal officials.

Western Sky has maintained an aura of immunity over the years, claiming that state and federal laws did not apply to it as the company’s owner fell under the jurisdiction of the Cheyenne River Sioux Indian Reservation by being its member. However, the lawsuit pressed that the company held the legal status of an LLC which had been formed under the law of South Dakota, and hence state and federal laws did apply to it.

The company sold loans in states where it did not have a license to lend, between the years 2010-2013, including the state of Georgia. In Georgia, payday loans are void if the amount of the loan is below $3,000 and the lender does not have a license.

In 2017, Western Sky had reached an agreement with its borrowers in Georgia to forgive the $17 million in their outstanding debt and also pay them $23 million as restitution.

The loans that are given by Western Sky range between $850-$10,000 in the loan amount, however, the average loan amount given out was $2,600. In the lawsuit, it was said that a borrower acquiring a loan of $2,600 was expected to repay a total of $13,840 to Western Sky over a loan term of 47 months.

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Akbar Lashari

Akbar is a talented news editor who follows the consumer finance industry closely and has written for many famous news & educational websites such as Forbes.