CashCall Settles Deception Case26 Aug, 2009 Response This Week
LOS ANGELES – CashCall Inc., the fast-money lender, agreed this week to pay $1 million to settle California state prosecutors’ allegations that the company ran deceptive ads to collect debt from customers, reports the Los Angeles Times.
The company, known for making loans in as quickly as one day, used television ads featuring child star Gary Coleman talking about personal financial problems. According to a civil complaint filed by the California attorney general’s office, CashCall charged high-interest rates while advertising low rates. The complaint went on to say that when customers fell behind on payments, CashCall would make verbally abusive telephone calls, all hours of the day and night.
The company has not admitted to any foul play but assisted in the investigation.
The company’s ads claim that cheap loans are available to all, when in fact, low-interest rates are only available to active-duty military personnel and their families, in keeping with limits under federal law. In a statement, Attorney General Jerry Brown said CashCall used methods that violated California law, including causing customers to incur bank fees by repeatedly trying to collect payments despite knowing there were insufficient funds. In some instances, the company even discussed financial information with borrowers’ friends and neighbors.
In the verdict, CashCall will pay $1 million in civil penalties and legal expenses. Currently the company funds about $1 million in loans each month. Two years ago, it was funding $20 million per month. The company removed its ads and will retrain employees to comply with court orders. In addition, employees that violate the order are to be fired.