California Court Enjoins Lender From Continuing Allegedly Predatory Lending Practices

On August 24, CashCall, Inc. - an Anaheim, California based lender that makes small, unsecured cash loans to consumers at high interest rates - consented to the entry of a final judgment and permanent injunction in connection with allegations by the California Attorney General regarding its lending and collection activities. According to the complaint, CashCall allegedly misled customers with deceptive television, radio and online advertising, in violation of California Business and Professions Code Section 17500. For example, while CashCall’s advertisements suggested that low interest rate loans were available to all borrowers, the advertised rates were only offered to some borrowers. The complaint further alleged that CashCall used illegal and abusive debt collection practices (e.g., making excessive and verbally abusive telephone calls at all hours of the day and night and/or threatening to initiate law enforcement and wage garnishment proceedings against borrowers without any basis for doing so) in violation of California Business and Professions Code Section 17200. The court order requires CashCall to (i) cease making excessive and verbally abusive telephone calls, (ii) pay $1 million in civil penalties and expenses related to the investigation and resolution of the case, (iii) train its employees within 30 days, and not fewer than four times per year thereafter, to ensure compliance with the judgment, (iv) terminate any officer, director or employee who violates the terms of the judgment, (v) record all telephone calls made to, or received from, prospective and current borrowers, and (vi) maintain a detailed log of all consumer complaints.