CFPB allegations against Cashcall

Cashcall that has being accused by the Consumer Financial Protection Bureau (CFPB) of engaging in unfair, deceptive, and abusive practices, including illegally debiting consumer checking accounts for loans that were void is filing claims in chapter 13 cases.

California-based CashCall, was working with Western Sky Financial, a South Dakota-based online lender. Western Sky Financial famously stated that it was based in an Indian reservation and therefore not subject to state laws. But CFPB asserts that Western Sky is not exempt from state laws.

Typical loans start from $850, but the interest rates are out of this world ranging from 90 percent to 343 percent.Borrowers are required to authorize cashcall to debit payment directly from their bank accounts. The loans were then acquired by WS Funding and serviced by CashCall.

The matter is still pending with the CFPB.

Cashcall has intervened in bankruptcy cases by filing claims such as in the case below.

In re
Case No. 10-01271
(Chapter 13)
Not for publication in
West’s Bankruptcy Reporter.
On July 5, 2011, the debtor filed with the court an
objection to the proof of claim of CashCall, Inc. (Dkt. No. 51).
In the objection, the debtor contended that CashCall’s proof of
claim was not entitled to the prima facie validity afforded
claims under Rule 3001 because it did not contain sufficient
evidence of the debt as required by Rule 3001(c). The proof of
claim filed by CashCall consisted solely of a statement showing
the balance due without any information as to how it arrived at
that balance, including delineating charges for late fees and
interest. After the debtor filed her objection to its claim,
CashCall filed an amended proof of claim to include a detailed
account statement. The statement shows an outstanding principal
U.S. Bankruptcy Judge
S. Martin Teel, Jr.
The document below is hereby signed.
Dated: August 29, 2011.balance of $5,044.44 at an astounding 69% interest rate.1 Late
fees accrue at a rate of $29 per month. The debtor made one
payment on interest only between October 2009 and November 2010,
and four minimum payments from December 2009 to June 2011. Given
the interest rate on the loan, that the total amount claimed is
over $12,000 on a $5,000 principal is unsurprising. Because the
amended proof of claim contains a detailed account statement, it
is entitled to prima facie validity under Rule 3001, and,
accordingly, the debtor bears the burden of going forward on its
objection. The debtor has raised no objection to the substance
of CashCall’s claim. Thus, I will dismiss the debtor’s objection
without prejudice. For these reasons, it is
ORDERED that the Debtor’s Objection to Claim #1 Filed by
Creditor Cash-Call, Inc. and Notice of Deadline and Opportunity
to Object (Dkt. No. 51, filed July 5, 2011) is DISMISSED without
[Signed and dated above.]
Copies to: Debtor; recipients of e-notification;
CashCall, Inc.
c/o B-Line, LLC
MS 550
P.O. Box 91121
Seattle, WA 98111-9221
The debtor’s objection does not challenge this rate.
Rather, the debtor’s sole objection is that the creditor has
provided insufficient information to allow the debtor to see how
CashCall arrived at the amount claimed.
R:CommonTeelSMGarrettOrdersMiscOverruleOBJPOC (Stanback).wpd

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