States have usury laws that prevent lenders from setting outrageous terms that hard-pressed customers will never be able to fulfill. But these laws don’t always apply to short-term loans. The complaint for this class actions cites one company, Speedy Cash, that allegedly charges interest rates, fees, and penalties so high that borrowers can never repay their loans, and it claims that the company deliberately presents the loan agreements in such a way that customers have no time to review them and see what they are really signing up for.
The class for this action is all persons in California who took out loans of more than $2,500 from Speedy Cash, between August 31, 2014 and August 31, 2018, with an annual percentage rate of more than 90%.
Speedy Cash has thirty-six locations in California offering short-term loans. According to the complaint, it sometimes charges interest rates as high as 460% annual percentage rate (APR).
The complaint claims that Speedy’s business model is to lend money at impossibly high interest rates to consumers who are in hard-pressed circumstances and have few other choices for credit; then, when the consumer is unable to repay the loan, it imposes default interest and penalties that raise the balance owed even higher. Customers end up locked into loans that require them to repay many times the amount they borrowed.
Plaintiff Cindy Delisle is one of the customers caught in these arrangements. On July 14, 2018, she agreed to an Installment Loan and Promissory Note with Speedy to borrow $4,457.38 at an annual percentage rate of 95.737%. The complaint says that the agreement is what is called a consumer contract of adhesion under California and federal law, where a contract is drafted by a party of superior bargaining strength and imposed on a weaker party who has no ability to negotiate terms.
The complaint claims that that full promissory note and disclosures were only given to Delisle at final signing and that she had no real opportunity to review them. The terms required her to repay a minimum of over $15,000 to pay off the loan of less than $4,500.
The complaint claims that the rushed presentation of the contract and its terms were deliberate, intending to keep Lisle from understanding what she was getting into: “A reasonable consumer … would not understand the interest and penalty provisions by virtue of the method Speedy Cash uses to present the information.”
The complaint claims that this is a violation of California’s Unfair Competition Law.