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article imageOp-Ed: California officials seek to suspend payday loan outlet CashCall Special

By Jonathan Farrell     Jun 27, 2014 in Business
Sacramento - San Francisco City Attorney Dennis Herrera was pleased to hear the news that state officials are going after some of the most predatory of loan outlets, often referred to as "payday" loans.
For more than five years since 2007, Herrera and his staff have been in an on-gong struggle with payday lenders. This past June 13, The California Department of Business Oversight announced that it will seek to suspend the licenses of CashCall, Inc. for violations of the California Finance Lenders Law in connection with CashCall’s personal loan origination and servicing activity.
This was indeed good news to Herrera and his team who know all too well the financial hardship and strain predatory loan practices place upon the people. Especially, for those people underserved by banks, which usually is working class poor, migrant and day laborers and people not accustomed to having a bank account for one reason or another.
And since the recession, as the Wall Street Journal points out, more people who need loans are becoming vulnerable to payday lenders and their tactics.
When Herrera took on the litigation effort back in 2007 it was against store front deposit deferred lenders, Check 'n Go and Money Mart. These were licensed loan outlets offering quick cash loans based upon paycheck posted-dated pay-back returns.
"The drawback is the interest these types of outlets charge," said Mark Leyes, communications director for the California Dept. of Business Oversight. "Annualized interest rates (APR) can be in triple digits." "Think about it, he said, if a worker is borrowing a few hundred dollars at those rates, the payback could take a huge bite out of future paychecks, especially if the borrower takes out successive loans.”
Leyes also noted that while it is not illegal to charge high interest, it is problematic for these type of loan outlets to market to such financially vulnerable people. When Herrera fought back in litigation with MoneyMart and Check 'n Go, Check 'n Go interests rates had exceeded in some cases more than 400 percent. "This is illegal and was a deliberate effort to circumvent state law," said Herrera's press secretary Matt Dorsey. Herrera's office was able in 2012 to get some restitution to local consumers through a settlement.
But the business and unethical practice of payday loan outlets continues. This is why Herrera and his staff were pleased that the state is taking action. The Dept. had formally commenced a regulatory examination of the books and records of CashCall back in Nov. of 2010.
This action taken on June 13 by the State of California alleges that CashCall made misleading representations and omitted material information in its sales pitches in order to lure consumers into taking out loans in amounts greater than what the consumer needed or was seeking. The California Finance Lenders Law, just like Leyes mentioned, does not limit the amount of interest a lender can charge for loans of $2,500 or more and CashCall routinely charged annual interest rates of 135 percent or more on personal loans.
“The Department upholds the state’s financial laws to protect consumers from unfair and deceptive lending tactics,” said Commissioner of Business Oversight Jan Lynn Owen.
“CashCall’s predatory marketing and personal lending practices will not be tolerated in California," she said.
Since the Commissioner's action on June 13, "the only development since is that CashCall has requested a hearing to contest the 'accusation,' said Leyes, a hearing has not yet been scheduled. The suspension will not occur while the hearing is pending," he noted.
The Department of Business Oversight is responsible for administering and enforcing the California Finance Lenders Law. CashCall, Inc. is licensed by the Department under the California Finance Lender Law and originates both secured and unsecured loans in the State of California pursuant thereto. To read the CA Dept. of Business Oversight's complete and formal complaint view the following PDF from the Department's web site.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
More about California, California Dept of Business Oversight, Mark Leyes, City Attorney Dennis Herrera, Payday loans
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