On September 15, the U.S. District Court for the Southern District of California granted summary judgment for a debt collector, holding that attempting to collect on a loan with a 128.4 percent APR did not violate the FDCPA or California’s Rosenthal Fair Debt Collection Practices Act (the Rosenthal Act). The plaintiff argued that the high interest rate rendered the loan unconscionable and that collection efforts were therefore unlawful under both statutes and under the California Business and Professions Code.

The court found a “minimal degree” of procedural unconscionability due to the “take-it-or-leave-it” nature of the loan terms, but noted that the APR was prominently disclosed, and the plaintiff had an opportunity to review the terms before accepting the loan. As to substantive unconscionability, the court emphasized the loan was unsecured and the borrower had a low credit score, making the plaintiff a “high-risk borrower.” This factored into the court’s analysis, as the court cited California precedent that “[u]nsecured loans made to high-risk borrowers often justify high rates,” and concluded that the 128.4 percent APR, while high, was neither “unduly oppressive,” nor did it “shock the conscience,” as required to render an APR unconscionable.

Accordingly, the court concluded the loan was not unconscionable, and thus further collection attempts thereon did not violate the FDCPA or the Rosenthal Act. Thus, the court granted the defendant’s motion for summary judgment.