Maybe you also noticed that these ads suddenly stopped.
Cash Call has stopped offering consumer loans, according to customer service agents who answer the company’s toll-free number. The Cash Call site no longer integrates the online personal loan application.
The owners and lawyers of Cash Call did not return the 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 say the company charged them “unreasonably high” interest rates and imposed oppressive terms that plunged them deep into debt.
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Now they are demanding all their money back.
âIt involves hundreds of millions of dollars that Cash Call has raised from these borrowers,â said class action lawyer James Sturdevant.
He just won 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 lawyers during the High Court hearing.
“One of the judges asked if the law allowed Cash Call to charge one million percent interest,” Sturdevant recalled. “Cash Call said yes, they could legally charge that much. They just didn’t. It’s outrageous.”
Cash Call was based on state law setting specific limits on interest rates, but only for loans under $ 2,500. Cash Call only offered loans higher than that, presumably to get around these statutory limits.
He then set interest rates as high as 135 percent. Sturdevant said the company plans to reach consumers so desperate for money that they have no choice but to pay high prices.
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âThe people targeted by Cash Call for over a decade are people in financial difficulty,â Sturdevant said. “People who lost their jobs, who got divorced, suddenly had to face big medical bills. This only added to their financial turmoil.”
Among them was Eduardo De La Torre from East Palo Alto. He was a student at UC Davis in 2006 when he ran out of funds and heard the Cash Call commercial.
âI was their target audience,â said De La Torre, now a teacher assistant at East Palo Alto. âAt that time, I was a 21 year old kid, I didn’t know what I was getting myself into, and I just needed a little money. It ended up haunting me year after year.â
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 pay off most of the loan the next day to avoid going into debt, but when he tried, Cash Call failed to process his payment.
Cash Call charged him the extraordinary rate of 96 percent interest. He also took automatic 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 turned red. Cash Call continued to demand payment. And De La Torre said the company has even started calling coworkers on campus. He finally stopped paying.
De La Torre then became a principal plaintiff in the class action lawsuit.
While 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 rules on the “unreasonable” state. This law is interpreted to mean that the loans are illegal, come with “shocking” interest rates and tough terms, 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 has set up a business model based on the assumption that at least 40% of borrowers will default.
âThey drew as much blood as possible from a turnip, emptying their bank accounts with automatic debits,â he said. “Once they got all their money and the borrowers defaulted, Cash Call would sell the loans for pennies on the dollar to a debt collector and make even more money.”
Cash Call founder J. Paul Reddam and the company’s lawyers did not respond to numerous calls and emails seeking comment on the allegations. They also did not respond when asked about the shutdown of the once giant consumer finance company.
However, Cash Call’s court briefs claim that the company acted in good faith and within the law. The company also went on to say that the plaintiffs had defaulted on their loans and still owed the company money.
The case is now returning to federal court for trial to decide whether cash appeal rates were illegally high. Borrowers demand 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 ruling. “But that’s not enough. Cash Call still has all of these profits. Millions of dollars. I think they should pay it back.”
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