$15M CashCall Settlement to Benefit Virginia Payday Borrowers

Thousands of Virginia payday loan borrowers are set to benefit from a $15 million CashCall settlement, following initial approval by a federal judge.

U.S. District Judge John A. Gibney Jr. granted preliminary approval of the Cash Call settlement this past Monday.

The settlement will provide more than $15 million in relief for persons affected by the defendant’s allegedly fraudulent use of Native American tribal jurisdiction to evade federal and state payday lending laws.

Plaintiffs James Hayes, Debera Grant, Herbert White, Leslie Grainger and Donald Hill were at the helm of this CashCall class action lawsuit. They accused defendants CashCall Inc., Delbert Services Corp. and John Paul Reddam of violating the federal Fair Debt Collection Practices Act.

The plaintiffs alleged that in the mailings used by the defendants to collect high-interest loan debts, the defendants failed to disclose the alleged creditor’s identity and failed to include the required notice identifying the letter as coming from a debt collector.

The Virginia attorney general’s office later joined the CashCall class action lawsuit as an intervenor, raising allegations that defendants CashCall and Delbert had collected illegal rates of interest, up to 230 percent, on online payday loans.

The attorney general also accused the defendants of fraudulently using tribal sovereign immunity to evade consumer protection laws, thereby avoiding Virginia’s 12 percent cap on loan interest rates.

The defendants allegedly claimed immunity by virtue of their association with Western Sky Financial LLC. Western Sky was a payday lender based on an Indian reservation and owned by a member of the Cheyenne River Sioux tribe.

But according to the plaintiffs, Western Sky has no relation to the tribe’s sovereign government. The company was formed under the laws of South Dakota in 2009, they argued. The attorney general described this set-up as a “rent-a-tribe” scheme.

Other CashCall settlements were reached earlier this month in actions brought in Florida and the District of Columbia.

Under terms of the Virginia CashCall settlement, Class Members can expect to receive payments totaling over $9.4 million in aggregate. The defendants will also be required to forgive an additional $5.9 million in outstanding debt.

As approved by the court, the settlement Class will cover “[a]ll individuals who obtained a loan from Western Sky that was subsequently purchased by WS Funding and who are identified as Virginia residents in their Western Sky loan agreements.”

This definition is expected to cover 17,046 borrowers. Class Members will have opportunities to object to the CashCall settlement and to opt out of Class Membership.

Top Class Actions will post updates to this class action settlement as they become available. For the latest updates, keep checking TopClassActions.com or sign up for our free newsletter. You can also receive notifications when this article is updated by using your free Top Class Actions account and clicking the “Follow Article” button at the top of the post.

Counsel for the plaintiffs and Class are attorneys Leonard A. Bennett, Thomas Domonoske, Elizabeth Hanes and Craig C. Marchiando of Consumer Litigation Associates PC, Camille A. Crandall, Andrew J. Guzzo and Kristi C. Kelly of Kelly & Crandall PLC, Dale W. Pittman of the Law Offices of Dale W. Pittman, and Jay Speer of the Virginia Poverty Law Center.

The CashCall Class Action Settlement is James Hayes, et al. v. Delbert Services Corp., et al., Case No. 3:14-cv-258, in the U.S. District Court for the Eastern District of Virginia.