Hundreds of D.C. residents who paid outrageous interest rates on loans will be getting some of their money back.
The D.C. attorney general sued lending company CashCall for illegal loan servicing. And Wednesday, the office announced a multimillion-dollar settlement.
The attorney general’s office called it one of the most egregious examples of predatory lending it has ever seen.
This is a big win for the attorney general's office and an even bigger win for the 1,300 residents affected, many of whom paid interest rates close to 200 percent on their loans.
Those people include Cynthia Allston of northeast Washington, who turned to CashCall after she lost her job. She knew she wouldn't qualify for a traditional loan.
"I was desperate," she said. "I found this one, and I took a chance."
She borrowed $2,500 -- but at an interest rate of 139 percent. That small loan ended up costing her more than $13,000.
"I was cheated," she said. "But I am going to get some of it back."
The attorney general accused CashCall of violating the District's usury law, which caps the interest rate of what financial institutions can charge at 24 percent. CashCall is accused of charging upwards of 300 percent.
CashCall argued the loans were not subject to usury laws because the loans were issued by a partner company located on an Indian reservation, which is exempt from usury laws.
“CashCall, the company we sued in this case, sought to escape the usury laws in the District of Columbia and in other jurisdictions by having operations in Native American lands -- in this case in South Dakota,” Attorney General Karl Racine said.
A federal judge ruled against CashCall, saying, "It is clear that the parties’ choice was solely based on CashCall's desire to shield itself against state usury and licensing laws."
D.C. and a number of states settled lawsuits against the company and are getting restitution for their residents.
In a statement to News4, the attorney for CashCall said, "Although we were confident of our legal positions, we concluded that it was in the parties’ best interests to resolve our disputes and avoid protracted and expensive litigation."
“It's a good day when we're able to return monies that were taken in an unlawful way from people to those very folks,” Racine said.