Maybe you also noticed that these ads suddenly stopped.
Cash Call has stopped offering consumer loans, according to customer service agents answering the company’s toll-free number. The Cash Call site no longer includes the online personal loan application.
Cash Call’s owners and attorneys did not return calls for comment. But the shutdown comes after a key decision in a class action lawsuit brought by more than 130,000 Cash Call borrowers.
They claim the company charged them “unreasonably high” interest rates and imposed oppressive terms that plunged them into deep debt.
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Now they are demanding all their money back.
“It involves hundreds of millions of dollars that Cash Call has collected from these borrowers,” class action attorney James Sturdevant said.
He is coming off a key victory in the state Supreme Court. The judges ruled that interest rates may be too high, and therefore illegal, even if they do not fall under a specific law regulating interest rates.
Sturdevant said the decision came after a pointed question to Cash Call’s solicitors during the High Court hearing.
“One of the judges asked if the law allowed Cash Call to charge a million in interest,” Sturdevant recalled. “Cash Call said yes, they could legally charge that much. They just didn’t. It’s outrageous.”
Cash Call relied on state law setting specific limits on interest rates, but only for loans under $2,500. Cash Call only offered loans higher than this, presumably to circumvent these statutory limits.
He then set rates as high as 135% interest. Sturdevant said the company intended to reach consumers so desperate for cash that they had no choice but to pay high rates.
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“The people who have been targeted by Cash Call for over a decade are people in financial difficulty,” Sturdevant said. It only added to their financial turmoil.”
Among them was Eduardo De La Torre of East Palo Alto. He was a student at UC Davis in 2006 when he ran out of funds and heard the Cash Call ad.
“I was their target audience,” said De La Torre, now a teacher’s aide at East Palo Alto. “At that time, I was a 21-year-old kid, I didn’t know what I was getting into and I just needed some money. It ended up haunting me year after year after year. “
De La Torre said he only needed to borrow a few hundred dollars, but Cash Call insisted he withdraw at least $2,600. He claims the company told him he could repay most of the loan the next day to avoid going into debt, but when he tried, Cash Call did not process his payment.
Cash Call charged him the extraordinary rate of 96% interest. He also took direct debits from his bank account as a condition of the loan.
It wasn’t long before De La Torre ran out of money. His bank account fell into the red. Cash Call kept demanding payment. And De La Torre said the company has even started calling co-workers at his work on campus. He finally stopped paying.
De La Torre then became a lead plaintiff in the class action.
Although state law doesn’t set specific rates for loans over $2,500, Sturdevant says that doesn’t mean lenders can charge whatever they want. Instead, he says the law of state “inequity” rules. This law is interpreted to mean that the loans are illegal, come with “shocking” interest rates and harsh conditions – such as requiring automatic debits from a borrower’s bank account.
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Aggressive marketing and unfair collection tactics can also be factors that make them illegal.
Sturdevant says Cash Call implemented a business model based on the assumption that at least 40% of borrowers would default.
“They extracted as much blood as they could from a turnip, emptying their bank accounts with automatic debits,” he said. to a debt collector and earn even more money.”
Cash Call founder J. Paul Reddam and company attorneys did not return numerous calls and emails seeking comment on the claims. They also did not respond when asked about the closure of the once-giant consumer lending business.
However, Cash Call’s court briefs claim that the company acted in good faith and within the law. The company also countered by saying that the plaintiffs had failed to repay their loans and still owed the company money.
The case now returns to Federal Court for a trial to decide whether the cash call rates were illegally high. Borrowers seek reimbursement of all interest payments and late fees.
Cash Call still offers mortgages, but when asked about consumer loans, the customer service agent referred a caller to another quick payment company.
“It was a partial victory,” De La Torre said of the Supreme Court’s decision. “But that’s not enough. Cash Call still has all these profits. Millions of dollars. I think they should pay it back.”
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