Cashcall, Inc. v. Maryland Commissioner of Financial Regulation
139 A.3d 990
| Md. | 2016Background
- CashCall marketed and processed small, high‑interest loans to Maryland consumers (rates ~59%–96%), routed applications to out‑of‑state, federally insured banks, and then purchased each loan from the bank shortly after funding.
- Under CashCall’s agreements, the bank disbursed funds to the borrower (net of an origination fee), and CashCall was contractually required to repurchase the loan (three days after origination) and thereafter collect principal, interest, and fees directly from the borrower.
- The Maryland Commissioner issued a cease‑and‑desist and penalty order, concluding CashCall operated a “credit services business” in violation of the Maryland Credit Services Business Act (MCSBA).
- CashCall argued Gomez v. Jackson Hewitt established a broad requirement that a consumer must pay the facilitator directly for the MCSBA to apply, so CashCall fell outside the statute.
- The Court of Special Appeals affirmed the Commissioner; the Court of Appeals granted certiorari and affirmed, holding Gomez’s “direct payment” language is limited to its facts and does not bar application of the MCSBA to entities like CashCall.
Issues
| Issue | Petitioners' Argument | Commissioner/State's Argument | Held |
|---|---|---|---|
| Whether MCSBA requires a direct payment from the consumer to the loan facilitator for the facilitator to be a “credit services business” | Gomez requires payment to come directly from the consumer to the facilitator; CashCall received no direct consumer payment for facilitation | The MCSBA covers businesses that obtain extensions of credit for consumers in return for remuneration even if payment is received indirectly; Gomez’s direct‑payment rule was limited to its facts | The direct‑payment formulation in Gomez is limited to tax‑preparer RAL facts; MCSBA does not require a broad direct‑payment rule; CashCall is a credit services business |
| Whether CashCall provided services “in return for the payment of money or other valuable consideration” under CL §14‑1901(e) | CashCall contends it was not paid directly for loan facilitation and therefore not compensated for credit services | Commissioner shows CashCall obtained the right to collect principal, interest, and origination fees and thereby was compensated for facilitating loans | Substantial evidence supports that CashCall was compensated (via assignment/collection rights and origination fee) and thus engaged in a credit services business |
| Whether applying MCSBA to CashCall would sweep in ordinary merchants (absurd‑results concern) | Risk of absurd expansion (as in Gomez) if indirect payments suffice | CashCall’s business model is solely loan facilitation and purchase (distinct from ancillary facilitators like tax preparers), so no absurd extension | Gomez’s concern about sweeping ordinary retailers is confined to its facts; no absurdity here |
| Standard of review for agency fact findings | CashCall argued errors in agency findings | Commissioner relied on administrative record and contracts | Court applied substantial‑evidence review and found ample record support for the Commissioner’s factual findings |
Key Cases Cited
- Gomez v. Jackson Hewitt, Inc., 427 Md. 128 (Md. 2012) (held that, in the RAL/tax‑preparer context, the MCSBA did not apply where facilitator received no direct payment from the consumer; reasoning limited to those facts)
- Maryland Comm’r of Fin. Regulation v. CashCall, Inc., 225 Md. App. 313 (Md. Ct. Spec. App. 2015) (intermediate appellate opinion affirming Commissioner’s order against CashCall)
- Woznicki v. GEICO Gen. Ins. Co., 443 Md. 93 (Md. 2015) (cited for principle that courts may not add requirements to clear statutory language)