News Column

State takes aim at fast money lender CashCall Inc.

June 14, 2014

By Mark Glover, The Sacramento Bee



June 14--The state is targeting a high-profile California lender that touts its ability to quickly get cash into customers' hands.

The California Department of Business Oversight announced Friday that it will seek to suspend the licenses of CashCall Inc. for alleged violations of state lending laws.

CashCall, which the state says operates its "main licensed office" in the Southern California city of Orange, is known for its splashy media advertisements. In some ads, the company acknowledges that its loans can be expensive but touts the immediate availability of cash.

However, the state charges that CashCall's personal loan origination and servicing activities violate the California Finance Lenders Law.

The oversight department's formal complaint alleges that CashCall made misleading representations and omitted material information in its sales pitches in order to lure consumers into borrowing more than they needed or were seeking. The state also noted that CashCall routinely charged annual interest rates of 135 percent or more on personal loans.

The complaint cites problems with numerous loans, dating back to 2008, and asks for CashCall licenses to be suspended for up to 12 months.

The Department of Business Oversight, or DBO, said CashCall is entitled to request a hearing to respond to the allegations. The hearing process and results would be submitted to the California Office of Administrative Hearings, before ultimately coming back to the DBO for a final ruling. During this process, the DBO said, CashCall's licenses remain valid.

Attempts to reach CashCall for comment were unsuccessful.

The DBO complaint says it began a regulatory examination of the books and records of CashCall in late 2010. It contends that CashCall "routinely advertised on television and radio that it made personal loans up to $2,600," but consumers calling CashCall or visiting its website were informed that the company does not make loans of less than $2,600.

The state regulates interest rates on loans less than $2,500. There is no interest-rate limit on loans of $2,500 or more; a licensed lender can charge whatever rate it chooses.

"The department upholds the state's financial laws to protect consumers from unfair and deceptive lending tactics. CashCall's predatory marketing and personal lending practices will not be tolerated in California," said Jan Lynn Owen, commissioner of business oversight.

The DBO oversees the operations of state-licensed financial institutions, including banks, credit unions and money transmitters.

The online lender has been in hot water with California in the past.

In 2009, it was slapped with a court order to pay a $1 million fine and halt its alleged "loan shark" debt-collection tactics. That came as a result of accusations by then-Attorney General Jerry Brown, who charged that CashCall was making "excessive and verbally abusive" phone calls to consumers, some of whom paid interest rates as high as 139 percent.

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(c)2014 The Sacramento Bee (Sacramento, Calif.)

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Source: Sacramento Bee (CA)


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