California AG Gets $1 million Judgment Against Lender Over Collection Practices

California Attorney General Edmund G. “Jerry” Brown, Jr. announced Monday that his office won a judgment against an Anaheim-based small-balance lender that will force the company to stop using “loan shark tactics in collecting debt, including abusive calls at all hours of the day and night and empty threats of law enforcement action.”

Brown’s judgment against CashCall, Inc. also calls for the company to pay $1 million in civil penalties and legal expenses.

The lawsuit alleged that CashCall used misleading advertising in addition to aggressive debt collection tactics that included:

• Making excessive and verbally abusive telephone calls at all hours of the day and night;
• Causing borrowers to incur bank fees by repeatedly trying to collect payments despite knowing there were insufficient funds in the borrowers’ accounts; 
• Threatening to initiate law enforcement and wage garnishment proceedings against borrowers without any basis for doing so; 
• Improperly discussing private financial information with borrowers’ friends, colleagues and neighbors; 
• Failing to honor borrowers’ requests to cancel automatic withdrawals from checking accounts; and 
• Continuing to contact borrowers by phone after receiving requests to only contact them in writing.

Brown also said that CashCall’s advertising consistently misrepresented the effective interest rates on the loans the company provided to consumers.  The AG’s office said that the lender charged what amounted to 139 percent annual interest on its loans, which was not reflected in the advertising. Brown noted that the company used former Diff’rent Strokes star Gary Coleman in its TV advertising campaign.

"CashCall preyed on consumers desperate for cash, charging triple digit interest rates and using loan shark tactics to collect on their debts," Brown said. "This judgment forces CashCall to stop harassing its customers and should serve as a warning to consumers to be wary of fast-money lenders."

Brown said that the court order “puts an end to CashCall’s illegal debt collection practices and stops its misleading advertising.” The settlement also requires CashCall to:

• Stop making excessive and verbally abusive telephone calls at all hours of the day and night;
• Pay $1 million in civil penalties and expenses related to the investigation and resolution of this case; 
• Train its employees within 30 days and not fewer than four times per year thereafter to ensure compliance with the judgment; 
• Terminate any officer, director or employee who violates the terms of the judgment; 
• Record all telephone calls made to, or received from, prospective and current borrowers; and 
• Maintain a detailed log of all consumer complaints.