California Supreme Court Deals Blow to Payday Lenders

California Supreme Court Deals Blow to Payday Lenders California Supreme Court Deals Blow to Payday Lenders California Supreme Court Deals Blow to Payday LendersInside Subprime: Aug 13, 2018By Grace AustinThe California Supreme Court has dealt a major blow to payday lenders in the Golden State and opened the short-term loan market up to future lawsuits. In a unanimous ruling this Monday, the state Supreme Court said rates on larger loans can be “unconscionable,” so much so that they are illegal.Unlike some other states in the union, California does have regulations against payday lending, but the Golden State is among the top 6 states in the country for short-term loan fee volume. Thousands of payday loans are taken out every year, worth millions of dollars. In other words, payday lenders have a lot to lose.  The plaintiffs’ argued that the company targeted consumers with bad credit under financial duress, and its go-to marketing strategy was TV ads touting fast money. Predatory lenders often prey on those with low credit scores and low-income jobs, who often and easily end up in a c ycle of debt. While the De Le Torre decision lays ground rules for payday lending penalties, it doesn’t give specific numbers: “We recognize how daunting it can be to pinpoint the precise threshold separating a merely burdensome interest rate from an unconscionable one.” The court did, though, bring up the authority of California’s Department of Business Oversight and the courts to enforce rules against “unconscionable” loans. And the top judge stated that courts can curtail interest rates and force payday lenders to compensate borrowers if the loans are “oppressive.” That could apply to millions of loans in California, according to the plaintiff’s lawyer, who spoke with the San Francisco Chronicle about the case. The De La Torre case will now go back to the Ninth Circuit of Appeals, and potentially back to federal court in San Francisco, where the lawsuit originated. And experts say this could have sub-prime payday lenders re-thinking business in California. Read more about Payday and Title Loans in our  Subprime Reports.More California Subprime ReportsAnaheim | Bakersfield | Chico | Fresno | Los Angeles | Modesto | Oakland | Redding | Riverside | Sacramento | San Diego | San Francisco | San Jose | Santa Barbara | StocktonVisit  OppLoans  on  YouTube  |  Facebook  |  Twitter  |  LinkedIn