On January 22, 2019, the California Department of Business Oversight (DBO) installed with a small lender in the amount of approximately $ 900,000 for allegedly directing consumers to higher value loans in order to avoid statutory interest rate caps and engage in certain unauthorized activities in in connection with payday loan transactions in the state. According to the regulations, the lender – a lender and broker licensed under the California Finance Act (CFL) and an approved deferred deposit initiator (i.e. placed borrowers in larger loan amounts of $ 2,500 or more in order to evade interest rate caps under the CFL. The regulation also claims that the lender made false, misleading or deceptive statements in its advertising by stating in brochures that it made loans “until ‘to $ 5,000 ”” without specifying that the minimum loan amount offered by [the lender] was $ 2,501.00 ”and did not allow certain borrowers to make advance payments, as permitted by applicable law, of any amount on a loan agreement at any time.
According to at DBO, the lender also engaged in various unauthorized payday lending activities, including allegations that he overcharged about $ 700,000 in payday loan transactions “by collecting fees twice, allowed borrowers to take out a new loan before an old loan is repaid and deposit certain borrower’s checks before the due date stipulated in the loan agreements without their written authorization.
As provided in the press release and the settlement agreement, the lender is required, among other things, to repay approximately $ 800,000 to eligible borrowers (consumer loans and payday loans), pay various penalties and other charges, remove or modify all false, misleading or deceptive advertising about the granting of loans of any amount up to a certain amount, and provide accurate verbal and written information to borrowers regarding loan amounts and limits interest rate.