Court doesn't buy CashCall's 'tribal model' argument
A federal district court has ruled that CashCall's "rent-a-bank" strategy does not render it exempt from fair lending laws. The ruling is seen as a major victory for the Consumer Financial Protection Bureau, which had challenged CashCall's use of the "tribal model" to collect on loans in states with usury caps.
CashCall provides loans of up to $10,000 that include upfront fees, lengthy repayment periods, and interest rates ranging from 90% to 343%, the CFPB said.
CashCall, an online loan servicer, had teamed up with the now-defunct Native American lender Western Sky Financial in a what the CFPB said was a "rent-a-bank" scheme intended to take advantage of a federally insured bank's exemption from state usury laws.