The Consumer Financial Protection Bureau (CFPB) announced that it has sued California-based CashCall Inc., its owner, its subsidiary, and affiliate for alleged illegal marketing activities:
"... the defendants engaged in unfair, deceptive, and abusive practices, including illegally debiting consumer checking accounts for loans that were void... the high-cost loans violated either licensing requirements or interest-rate caps – or both – in at least eight states: Arizona, Arkansas, Colorado, Indiana, Massachusetts, New Hampshire, New York, and North Carolina..."
The loan amounts varied from $850 to $10,000, and typically had upfront fees, lengthy repayment terms, and annual interest rates from 90 percent to 343 percent. Some consumers signed agreements allowing their loans to be paid by direct debits from their bank accounts.
The lawsuit seeks monetary relief, damages, and civil penalties, plus future compliance by the defendants not to repeat the alleged violations. Named in the lawsuit as defendants were WS Funding LLC, and its affiliate, Delbert Services Corporation, a Nevada collection agency. The CFPB's investigation began in 2009 when it discovered:
"... CashCall and WS Funding entered into an arrangement with Western Sky Financial, a South Dakota-based online lender. Western Sky Financial asserted state laws did not apply to its business because it was based on an Indian reservation and owned by a member of the Cheyenne River Sioux Tribe. But this relationship with a tribe does not exempt Western Sky from having to comply with state laws when it makes loans over the Internet to consumers in various states... In September 2013, Western Sky stopped making loans and began to shut down its business after several states began investigations and court actions..."