California Rules Against Fast Money Lender
by Steve Cypher on Tuesday, October 6th, 2009Attorney General Brown forces lender to stop loan shark tactics
Auto Credit Express
Here at Auto Credit Express, we feel that an informed consumer is our best customer. We specialize in bad credit car loans through our nationwide network of retail automotive professionals. On our web site, you will find information that describes the loan process – including subprime car loans – as well as such valuable tools as an auto loan calculator. All these tools will help you make an informed decision.
What we would like to report on today is a recent action by the California Attorney General regarding collection calls.
Los Angeles - Attorney General Edmund G. Brown Jr. forced CashCall, Inc., an Anaheim-based fast-money lender, 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.
The court-ordered judgment also forces CashCall to stop misleading consumers with deceptive advertising and pay $1 million in civil penalties and legal expenses. CashCall used former child actor Gary Coleman as its television spokesman.
“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.”
CashCall, owned by Paul Reddam, founder and former owner of DiTech mortgage company, currently charges 139.34% annual interest on the $2,600 loan it offers to consumers. This means that consumers who make the required $298.94 monthly payment over 36 months pay $10,761.84 over the life of the loan. That adds more than $8,000 in interest to the loan.
Brown contends that CashCall used illegal and abusive debt collection practices when customers were unable to make on-time payments, in violation of California Business and Professions Code Section 17200. These practices 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 contends that CashCall misled customers with deceptive television, radio and online advertising in violation of Business and Professions Code Section 17500.
CashCall’s advertisements falsely suggested that low interest rate loans were available to all borrowers, when in reality, the rates advertised were only offered to some borrowers, usually members of the military. CashCall offered lower interest rates because Federal law limits the interest it can charge on loans to active duty service members and their families.
Today’s 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.
The Bottom Line
These types of loans and these types of harassing collection calls are predatory and illegal, in that order, and both practices need to stop.
If you are in the market for a car, those of us at Auto Credit Express would suggest you first try to finance one with a bad credit auto loan. For more information on these types of loans, as well as a way to apply for one in the comfort and convenience of your own home, please visit our web site at www.autocreditexpress.com.
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