A federal judge has reduced a financial penalty levied by the Consumer Financial Protection Bureau against CashCall, a payday lender, to $10 million, from $287 million.
The judge in the case ruled that the fine assessed by the CFPB was excessive, and that the agency failed to meet the burden of proof required for such a penalty. A copy of the ruling is available here.
The $10 million penalty assessed by Judge John F. Walter is the maximum statutory penalty allowed by the Consumer Financial Protection Act. The judge had previously ruled in favor of the CFPB, saying that CashCall illegally violated state usury laws by claiming an affiliation with a Native American tribe. But since CashCall did not intentionally deceive its customers, assessing a fine over and above the statutory limits was not required.
In his ruling, Judge Walter noted that the CFPB’s only witness, Ryan Thomas, “specifically admitted that he did not make any attempt to determine whether [the $287 million penalty] was appropriate for restitution.”
The $287 million was broken down into $235 million of restitution to consumers and a fine of $51.6 million.
The ruling against the CFPB comes in the same week that the agency dropped a lawsuit against another payday lender for virtually the same allegations of claiming association with a Native American tribe to circumvent state interest rate caps.
