California's financial regulator wants to revoke the license of an auto title lender for allegedly charging higher interest rates and fees than what is legally permitted and operating unlicensed storefronts.
The state's Department of Business Oversight filed an administrative action Tuesday against Fast Money Loan, in Long Beach, Calif., and its parent company, RLT Management. The agency said the lender charged annual interest rates above 100%, which exceeded the state's usury cap.
The state also launched an investigation to determine if the lender's high rates meet the state's legal standard for "unconscionable," which would authorize the Department of Business Oversight to void the loans.
A recent state Supreme Court opinion, De La Torre v. CashCall Inc., affirmed the state's ability to take action "when the interest rates charged [by state-licensed lenders] prove unreasonably and unexpectedly harsh,” the agency said in a press release.
The state agency alleges that Fast Money Loan added various fees to push loan amounts above a $2,500 threshold that exempts loans from the state usury cap. California caps interest rates at roughly 30% on auto title loans of $2,500 or less, but loans above that cutoff have no such limit.
Fast Money Loan originates 1% of all auto title loans in California but conducts 5% of all repossessions in the state, the oversight department said. The state regulator found in 2013 that Fast Money Loan held licenses for 12 locations in California, but listed 31 locations on its website.
The state agency also alleges that Fast Money Loan engaged in false and misleading advertising, failed to maintain adequate records and failed to verify that borrowers had the ability to repay the loans.
Fast Money Loan did not return a request for comment. The company can request a hearing on the agency's decision to revoke its license.
