CashCall, Inc.; WS Funding, LLC; Delbert Services Corporation; and J. Paul Reddam
On December 16, 2013, the Bureau filed a complaint in U.S. District Court for the District of Massachusetts against online loan servicer CashCall Inc.; its owner J. Paul Reddam; WS Funding, LLC, a subsidiary; and Delbert Services Corporation, an affiliate, for collecting money consumers did not owe. The Bureau’s amended complaint, filed on March 21, 2014, alleges that the defendants violated the Consumer Financial Protection Act of 2010’s prohibition against unfair, deceptive, and abusive acts or practices by collecting and attempting to collect consumer-installment loans that were void or uncollectible because they violated either state caps on interest rates or state licensing requirements for lenders. The Bureau alleges that CashCall serviced loans it made in the name of an entity, Western Sky, which was located on the Cheyenne River Sioux Tribe’s land. The loan agreements included a choice-of-law provision saying that the Tribe’s law applied to the loans. The case was transferred to the Central District of California, where defendants were based, on September 23, 2015. On August 31, 2016, the court granted the Bureau’s motion for partial summary judgment, concluding that the choice-of-law provision in the loan agreements was not enforceable and that the law of the borrowers’ states applied, resulting in the loans being void or uncollectible. Because the loans were void, the court found that the defendants engaged in deceptive acts or practices by demanding and collecting payment on debts that consumers did not owe. A two-day trial was held in October 2017 on the issue of appropriate relief. On January 19, 2018, the court issued findings of fact and conclusions of law imposing a $10.28 million civil money penalty but denying the Bureau’s request for restitution and an injunction. The Bureau and the defendants appealed. On May 23, 2022, the Ninth Circuit affirmed the district court’s finding of liability; vacated the district court’s penalty, remanding for the district court to re-assess the penalty amount taking into account defendants’ reckless conduct; and vacated the district court’s decision to award no restitution, remanding to the district court to determine whether and what restitution would be appropriate in consideration of the Ninth Circuit Court’s opinion. On February 10, 2023, the district court issued an order awarding the Bureau a $33,276,264 civil money penalty and $134,058,600 in restitution. On March 16, 2023, CashCall appealed the district court’s final judgment. The case remains pending on appeal.