On January 31, Virginia Attorney General Mark Herring announced a settlement with CashCall, Inc. over allegations that the company illegally deceived borrowers and collected interest in excess of legal rates.   

According to the press release, the A.G.’s Office alleged that CashCall violated Virginia’s usury, lending, and licensure laws by entering into an arrangement in which a company affiliated with a Native American TribeWestern Sky Financial, LLC would loan money to Virginians at annual rates as high as 230%.   

As part of the settlement, CashCall will pay $9.435 million in restitution to approximately 10,000 Virginia consumers, $5.9 million in debt relief to consumers, and $100,000 in civil penalties and fees to the Commonwealth.  Under the terms of the settlement, CashCall is also permanently barred from violating the Virginia Consumer Protection Act and from charging more than 12% annual interest on its loans without qualifying for a usury law exception. 

As noted here, here, here and here, CashCall and Western Sky have been under intense scrutiny from state attorneys general and the Consumer Financial Protection Bureau for their alleged attempts to circumvent state usury laws.  As previously noted, these cases are particularly important to payment processors, as states have filed lawsuits or executed settlement agreements with lenders and processors arising out of allegations that the lenders violated a state’s usury laws. 

The Virginia A.G.’s Predatory Lending Unit, the first of its kind, has been active in bringing enforcement actions against companies in the payday loan, title loans, consumer finance loan, mortgage loan, and mortgage servicing space.  Those in the consumer financial service industry should closely monitor this and future actions by the Virginia Attorney General. 

The settlement was filed in the United States District Court for the Eastern District of Virginia, Richmond Division, in conjunction with a pending Virginia class action settlement in the same court.