Jason S. Miyares
Attorney General of Virginia

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Commonwealth of Virginia
Office of the Attorney General

Mark Herring
Attorney General

202 North Ninth Street
Richmond, Virginia 23219


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~ Virginia consumers to receive $15.335 million in restitution and debt relief as part of settlement to resolve allegations that online lender used "rent-a-tribe" scheme to deceive consumers and collect illegal interest on online loans ~

RICHMOND (January 31, 2017) - Attorney General Mark R. Herring today announced that Virginia consumers will be receiving $15.335 million in restitution and debt relief as part of a settlement to resolve claims that CashCall, Inc. and its president and CEO J. Paul Reddam illegally deceived borrowers and collected illegal interest of up to 230% on online loans made in amounts of between $700 and $10,000. The settlement will result in $9.435 million in restitution to approximately 10,000 Virginia consumers who were overcharged illegal interest, an estimated $5.9 million in debt relief, and credit reporting corrections for affected borrowers. The settlement, secured by the Predatory Lending Unit of Attorney General Herring's Consumer Protection Section, also requires payment of $100,000 in civil penalties and attorneys' fees to the Commonwealth.


"Online lenders are quickly becoming a new source of high-interest, financially risky loans," said Attorney General Herring. "Unfortunately, like payday and car title loans before them, these small dollar loans issued online often come with exorbitant interest and fees that can trap a borrower in a cycle of debt. This is the largest settlement my Predatory Lending Unit has secured against an online lender. I'm glad we're going to be able to get some relief to consumers who were harmed and I hope this settlement sends a clear message that we will not allow lenders to deceive, defraud, or illegally abuse Virginians."


According to Attorney General Herring's complaint, CashCall broke the law by engaging in a "rent-a-tribe" scheme, using a South Dakota company with a purported Native American tribe affiliation called Western Sky Financial, LLC as a fa├žade for marketing and issuing its high-cost installment loans. CashCall used Western Sky's purported Native American tribe affiliation to deceive Virginia consumers into believing that no state or federal laws applied to its loans and that its excessive interest rates were legal. CashCall then collected the Western Sky loans at interest rates ranging as high as 230% annually. But, according to the complaint, Virginia's usury laws did apply to CashCall's loans and capped the collectable interest at 12% annually. Thus, the complaint alleges the following violations of the Virginia Consumer Protection Act:

  • Misrepresenting that Western Sky is a Native American business entity;
  • Misrepresenting that the Western Sky loans were subject only to the laws and jurisdiction of a Native American tribe;
  • Misrepresenting that the Western Sky loans were governed by the Indian Commerce Clause;
  • Misrepresenting that the Western Sky loans were not subject to federal laws or the laws of the Commonwealth of Virginia;
  • Misrepresenting that Western Sky was the lender on CashCall's Virginia loans; and
  • Misrepresenting the legality of charging more than 12% annual interest in the Commonwealth of Virginia.

The settlement includes the following key terms relating to CashCall's Western Sky loans:

  • Restitution-CashCall agrees to establish a $9.435 million fund to provide restitution to approximately 10,000 borrowers who paid interest beyond the 12% annual interest that CashCall could have legally collected on its Western Sky loans.
  • Debt Forgiveness-CashCall agrees to forgive approximately $5.9 million on the Western Sky loans it holds that currently remain outstanding.
  • Civil Penalties/Attorneys' Fees-CashCall agrees to pay to the Commonwealth of Virginia $100,000 in attorneys' fees and civil penalties.
  • Injunction-CashCall is permanently barred from violating the Virginia Consumer Protection Act and from charging more than 12% annual interest on its loans without qualifying for a usury law exception.

The civil settlement is in the form of a Stipulated Final Judgment and Order that has been filed with the United States District Court for the Eastern District of Virginia, Richmond Division. The settlement was filed in coordination with a pending Virginia class action settlement in the same court and the order is expected to be entered at the time the court approves the final class settlement.


The Commonwealth is represented in this matter by Assistant Attorney General James Scott and Senior Assistant Attorney General Dave Irvin of Attorney General Herring's Predatory Lending Unit. The Unit was established within Attorney General Herring's recently reorganized Consumer Protection Section, which now includes a focus on predatory lending in addition to deceptive conduct, anti-trust matters, charitable solicitation, and more.


For additional information on the settlement or to file a complaint about a consumer protection matter, please contact Attorney General Herring's Consumer Protection Section:


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