CHARLESTON, W. Va. (Legal NewsLine) -- Predatory loans with interest rates of up to 99 percent APR have lead to a California-based internet lender being sued by the West Virginia attorney general.

When consumers defaulted on their loans, CashCall would deluge the consumer with collection abuse and harassment, even threatening to visit the consumer at his or her place of employment and bill the consumer for the trip, the attorney general's office said in a statement.

Following numerous complaints to the attorney general's office, a complaint was filed alleging CashCall solicited consumers to use the state-chartered Community State Bank in Millbank, S.D., for high interest loans.

Because the bank is not located in West Virginia, CashCall contends, the usury laws of West Virginia do not apply. CashCall would then take on the actual risk of the loans, including repurchasing in full the loans from the bank three days after they are funded.

"CashCall created a business model intended to fly under the protective radar of West Virginia laws that set limits on interest rates to protect consumers from financial calamity," Attorney General Darrell McGraw said. "It is these kinds of unregulated lending practices that have brought West Virginia consumers and the nation to a financial precipice. Today, my office has drawn a line in the sand in an effort to fill the void left by lax or non-existent federal regulation to protect our consumers from financial predators."

The complaint against CashCall asks that the court find CashCall's loans to be illegal and to provide restitution to aggrieved consumers. In addition, the suit also calls for CashCall to comply with an investigative subpoena issued by the attorney general.

CashCall, in a response, has asserted that its business practices are regulated exclusively by federal law and argued that the attorney general is prohibited from investigating the facts underlying CashCalls' belief that it is beyond state regulation.