Embattled online lender CashCall has paid nearly $2 million in restitution and fines for allegedly deceiving and overcharging borrowers, California's Department of Business Oversight announced.
In a February settlement with the state, CashCall agreed to pay $125 in restitution to each of more than 7,000 eligible borrowers, for a total of $921,500. The state said Wednesday that it has audited the Anaheim company's loan files to ensure the completion of those payments.
CashCall also paid $1 million to the state for penalties and cost reimbursements.
California officials alleged that the firm duped consumers into taking out loans of $2,500 or more — those larger loans are not subject to a state interest-rate cap — even though the consumers wanted to borrow less.
In advertisements, CashCall allegedly suggested that borrowers could take out loans of $2,600, $5,000 or $10,000, as well as smaller loans. But consumers seeking modest sums were directed to borrow $2,600 and return the difference with a prepayment, without being told how that would impact the interest-rate rules the loan was subject to, according to the state.
The Department of Business Oversight also accused CashCall of failing to withdraw scheduled monthly payments, which stretched out loan terms and increased interest-rate costs for borrowers.
Under the terms of the settlement, CashCall will be required to include disclaimers in its advertisements indicating that the loans do not fall under the state's interest-rate cap for nonbank lenders.