CashCall Called on Carpet for Predatory Lending
California judge issues $235 million judgment in favor of borrowers
`Short-term lender CashCall will pay a $235 million judgment in a California class action lawsuit over predatory lending.
CashCall was offering short-term loans from $2500 to $10,000 to consumers at rates from 96% to 135%.
The judge in the case (De La Torre v. CashCall) found CashCall’s practices “unconscionable.”
California now has a 36% rate cap on loan interest rates, but these loans were made prior to that law taking effect.
The language of the ruling provides clear and explicit guidance on what constitutes usury and is a big win for consumers against a long-time bad actor in the industry.
The win in the CashCall case may have implications for payday predator OppFi, a fintech lender charging 160% interest rates in a so-called “rent-a-bank” scheme.
OppFi’s entire premise is that it is using its technology platform to faciliate the loan, but that Finwise is the “true lender.” Of course, OppFi is doing all the work — finding the borrowers, taking their money, servicing the loans, even engaging in collections. They simply use Finwise as the “bank of record” so they can charge a much higher interest rate — in this case, 160%.
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