June 13--The California Commissioner of Business Oversight has asked that CashCall, Inc.'s finance lenders licenses be suspended for up to 12 months.
The CBO issued a complaint June 4 alleging the Orange-based lender had falsely advertised the terms of its loans in order to get consumers to enter into unregulated personal loans.
CashCall routinely advertised loans of up to $2,600, according to the CBO. But when consumers called the company or went to its website they were told CashCall did not make loans less than $2,600.
Under the provisions of the California Finance Lenders Law, interest rates are regulated only on loans less than $2,500. A CFLL licensed lender can charge whatever interest rate it chooses on loans of $2,500 or more.
The complaint states that when consumers told CashCall they wanted a loan for less than $2,600, the company routinely told them that on the day of funding or shortly thereafter, they could give back whatever amount they didn't want as a prepayment. CashCall added this would reduce the principal balance, resulting in significant interest savings.
But CashCall failed to inform consumers that because the loans were for $2,600, the lender could charge any interest rate it chose, according to the CBO. CashCall charged up to 179 percent interest, while loans of less than $2,500 would have carried a maximum rate of roughly 30 percent.
The complaint also cites false reports and representations to the commissioner, failure to provide records, false filings and other misrepresentations to consumers. The examination of CashCall's books and records began around Nov. 23, 2010.
CashCall's lawyer could not be immediately reached for comment.
The complaint referenced civil or administrative actions brought against CashCall by more than a dozen states and the federal Consumer Financial Protection Bureau since 2008. The most recent saw CashCall reach a settlement with Connecticut's banking commissioner for violating the state's small loan lenders law. The company also reached a settlement with the New York Attorney General's Office in January for illegal personal loans.
The Consumer Financial Protection Bureau filed a lawsuit against CashCall in December alleging that the company and affiliates WS Funding LLC and Delbert
Services Corp. and their owner, J. Paul Reddam, illegally took money from consumers who did not owe it.
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