March 11, 2009
Lobel Financial, a California-based sub-prime auto lender, has been forced to stop its illegal campaign of harassment and intimidation against borrowers behind in their bills.
"This company charged its customers exorbitant interest rates for car loans and then waged an illegal campaign of harassment and intimidation when they couldn' t pay up," said Attorney General Edmund G. Brown Jr. "Now Lobel must stop its abusive tactics and comply with the law."
Lobel Financial, which makes loans to customers throughout the state, provides financing to people with poor credit who purchase vehicles through used-car dealerships. The typical interest rate of their loans is between 21-23 percent. Lobel performed its own debt collection efforts when consumers failed to make the required payments.
In 2007, the California Attorney General's Office initiated an investigation into Lobel s debt collection practices. The investigation found that Lobel frequently violated California's Fair Debt Collection Act by:
Calling its customers repeatedly and allowing the phone to ring continuously;
Calling a customer's employer and family members; and
Using a false name when calling.
Additionally, Brown says the company used more sophisticated pre-texting tactics to obtain confidential information of their customers. For instance, Lobel allegedly deceived ATT Wireless into providing confidential telecommunications records of at least 190 California ATT customers.
Lobel is also accused of using a calling card scam to con consumers into providing their calling information. It had a third-party vendor send the customer a free phone card; the company would then obtain information about the calls made by the customer using the calling card.
Hundreds of California consumers across California were victimized by Lobel's constant harassment and illegal debt collection activities, Brown says. Lobel Financial will pay $150,000 in civil penalties and $100,000 to the state for attorneys' fees and costs.