Today's Consumer Financial Protection Bureau (CFPB) enforcement action against CashCall marks a decisive strike in the ongoing crackdown on payday lenders' defective business model. The CFPB found that loan servicer CashCall's practices of collecting loans on behalf of online lender Western Sky were unfair, deceptive, and abusive.
This action is another example of ongoing collaboration between federal and state law enforcement. In addition to the CFPB, both North Carolina and Colorado filed suit against CashCall; North Carolina also sued Western Sky.
State consumer protections provided the foundation for the suits. Western Sky made predatory loans violating the laws in at least these states: Arkansas, Arizona, Colorado, Indiana, Massachusetts, New Hampshire, New York, and North Carolina. Laws in many states render illegal loans void altogether.
North Carolina's Attorney General Roy Cooper said today, "Borrowers trapped in these oppressive loans can make payment after payment but never get ahead . . . This type of loan is illegal in North Carolina for good reason, and we're cracking down on lenders that try to get around our ban."
CRL research consistently shows that payday loans, regardless of whether made by bank, storefront, or online lender, are structured to be unaffordable resulting in a long-term cycle of debt.
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For more information, contact Ellen Schloemer at 919-539-9092 or ellen.schloemer@responsiblelending.org.