In its consent order, the Department of Business Oversight agency also fined them $105,000 for the predatory actions. The agency has been coming down hard on high-cost consumer loans and payday lenders for actions that they deemed predatory. California Check Cashing Stores admitted no guilt in the consent order.
The company has eight North Bay locations as well as more than 100 lending stores through the state. Since late 2017, similar actions were taken by the Department of Business Oversight against four other companies, enforcing the limits the state has set forth for interest rates on these kinds of small-dollar loans.
The settlement addresses the alleged violations of payday loan administrators, which cannot exceed $300, and enticing customers to take out $2,500 or higher consumer loans to avoid these rate caps. According to California law, interest rates for $2,499 or less loan runs between 20 and 30 percent. However, for loans of $2,500 or more, there is no cap.
Department of Business Oversight Commission Jan Lynn Owen said, advising consumers to take out higher-cost loans to avoid the interest rate caps imposed is considered abuse. She said consumers deserve some protection and have access to lenders who will follow the law and be fair.
The agency’s ruling comes as the new Consumer Financial Protection Bureau chief allegedly has plans to loosen the newest payday lending federal rules that the Obama era proposed but had yet to be enacted. The rules would ensure some basic protections for people around the nation, and allow states to make it tougher on them such as imposing interest rate caps.
Richard Cordray, the first director of the CFPB appointed by former President Barack Obama, said the California case is just one good example of why the payday loan industry needs to be closely watched and regulated.
Although Community Choice Financial, which owns California Check Cashing Services, doesn’t agree with the findings, they agree to the settlement so they can continue working with state customers.
Besides its check-cashing services, the stores provide payday loans, prepaid debit cards and auto title loans. According to its website, the company can assist people get fast cash either online or in stores.
California state investigators found that, for a period of five years (2012 to 2017), the company would overcharge customers fees and interest by suggesting they take out loans of more than $2,500 in the hopes that could avoid the cap imposed upon them.
The agency also alleges the company used misleading and false advertising to lure customers saying it made loans up to $5,000, but the minimum was $2,501.
Read more how to get payday loans in California online!
