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De La Torre v. CashCall

California Class ActionUnited States District Court, (N.D. Cal.)Case No. C 08-03174 MEJ

Case Type:  Consumer RightsPredatory Lending

A lawsuit against CashCall representing a class of borrowers who received $2,600 loans at interest rates above 90 percent, was filed in the Northern District Federal Court in San Francisco on July 1, 2008.  The complaint alleges CashCall’s business practices violate numerous consumer protection and debt collection laws.  CashCall makes millions of dollars in unsecured personal loans to consumers every year at exorbitantly high and unconscionable interest rates, the majority of which are in excess of 90 percent interest per year.

CashCall targets consumers in distress who have limited credit alternatives and are financially unable to repay its loans as the loan terms require. It structures its loans so that they are effectively interest-only over much of the loan term, therefore requiring consumers to pay its extremely high interest charges for several years, without any significant reduction in their loan balances.  Its high interest rates, oppressive loan terms, and protracted repayment time make it impossible for most consumers who fall prey to its advertisements to pay off their loans within any reasonable time period, even to pay their loans according to a schedule without defaulting.  CashCall secures its profit by collecting high interest payments, while the outstanding principal balance is barely reduced while pumping its customers’ loan balances up by adding on late fees and insufficient fund charges. Once a customer falls behind in payments, CashCall turns to coercive collection practices to keep the customer paying.  A significant percentage of consumers, estimates at 45%, default on their loans, and the percentage of customers CashCall pursues with collectors is extremely high.  In collecting its loans, CashCall makes frequent and repeated harassing telephone calls to a consumer’s residence, place of employment, and/or cellular phone, up to multiple times a day, for days or weeks in a row, demanding payment of outstanding debt. During these phone calls, CashCall uniformly employs aggressive tactics, including abusive tone and language, harassing tone and language, and providing incorrect or misrepresentative information to convince consumers to make payments.

The district court certified two California sub-classes totaling approximately 135,000 individuals.

1.  The Loan Unconscionability Class: All individuals who, while residing in California, borrowed from $2,500 to $2,600 at an interest rate of 90% or higher from CashCall, Inc. for personal, family or household use on or after June 30, 2004 through July 10, 2011.

2.  The Conditioning Class: All individuals who, while residing in California, borrowed money from CashCall, Inc. for personal, family, or household use on or after March 13, 2006 through July 10, 2011 and were charged an NSF Fee.

After extensive discovery, plaintiffs and CashCall each filed a motion for partial summary judgment on October 17, 2013, on the conditioning class, and defendant filed a motion for summary judgment on the unconscionability class.  On July 30, 2014, the district court issued an extensive memorandum and order granting plaintiffs’ motion for summary judgment on the conditioning claim and denying CashCall’s motion for summary judgment on the unconscionability claim.  de la Torre v. CashCall, Inc., 2014 U.S. Dist. LEXIS 105313 (2014).  A trial on damages for the conditioning claim and liability and restitution on the unconscionability claim is set for May, 2015.

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