CFPB sues online lender
Dec. 17, 2013 – CFPB on Monday announced that it has sued online loan servicer CashCall Inc., alleging that the company engaged in unfair, deceptive and abusive practices by collecting money consumers did not owe.
“Today we are taking action against CashCall for collecting money it had no right to take from consumers,” said CFPB Director Richard Cordray in a press statement. “Online lending is rapidly growing and deserves ample regulatory attention. The Consumer Financial Protection Bureau will take action against online lenders and servicers that engage in unfair, deceptive, or abusive practices.”
This is the first action CFPB has taken against an online lender. The bureau’s investigation began in 2009 into California-based CashCall, its subsidiary, WS Funding LLC, and its affiliate, Delbert Services Corporation, a Nevada collection agency. CFPB’s press statement noted that consumer loans through CashCall ranged from $850 to $10,000 and had annual interest rates from about 90 percent to 343 percent. The bureau said the high cost of the loans violated either licensing requirements or interest-rate caps in some states making it illegal for CashCall to continue to debit consumers’ bank accounts for loan payments.
CFPB is seeking from CashCall:
- a refund to consumers any money that the company took from them where the loans were void or the consumer’s obligation was otherwise nullified, and
- future adherence to all federal consumer financial protection laws, including prohibitions on unfair, deceptive and abusive acts and practices.
Under the Dodd-Frank Act, CFPB has authority to take action against institutions engaging in unfair, deceptive or abusive practices. Credit unions remain subject to CFPB examination and enforcement if they have more than $10 billion in assets.
CFPB press statement