A federal judge has ordered the high-cost consumer lender CashCall to pay $167 million in connection with unjust gains from small-dollar loans after an appeals court overturned a previous order that provided no relief for consumers.
U.S. District Judge John Walter ruled that CashCall must pay $134 million in restitution, according to a court document filed Friday. He also ordered the California-based lender to pay a more than $33 million fine to the Consumer Financial Protection Bureau, which sued CashCall in December 2013.
The judge found that CashCall customers “had no legal obligation to pay” interest and fees after the nonbank lender worked with the now-defunct Western Sky Financial to circumvent state usury caps by overstating its affiliation with a sovereign Native American tribe, the Cheyenne River Sioux.
Civil damages will “compensate consumers for their losses, and will promote future transparency in the markets,” the judge wrote in the ruling. “CashCall harmed consumers by deceiving them about a major premise underlying their bargain: that the loan agreements were legally enforceable.”
In January 2018, Walter — who is in U.S. District Court for the Central District of California — rejected the CFPB’s request for over $280 million in penalties, including $235 million in restitution for consumers. At the time, the judge ordered CashCall to pay only a $10.2 million fine and zero relief to its customers.
Back then, Walter said that the CFPB had failed to justify that the relief it was seeking from CashCall was equitable to the damages caused to consumers. He also concluded that the consumer bureau had fallen short in proving that the lender misled consumers who took out personal loans of between $700 and $10,000.
That ruling was appealed, and the 9th U.S. Circuit Court of Appeals concluded that while Walter “correctly found liability,” he erred both in determining the penalty and in denying restitution to customers, according to last week’s court filing.
In his most recent ruling, the judge stated that whether the lender must provide restitution to consumers “depends not on the CFPB’s characterization, but rather on the nature of the underlying remedies sought.”
The CFPB declined to comment. Thomas Nolan, a lawyer for CashCall, said in an email that the lender is “evaluating the district court’s most recent order” and declined to comment further.