On October 19, the CFPB filed its opening brief before the U.S. Court of Appeals for the 9th Circuit in Consumer Financial Protection Bureau v. CashCall, Inc., an action brought by the CFPB to limit the reach of the so-called “tribal model” of online lending. In the original action, the court found that an online loan servicer that operated on tribal lands engaged in deceptive practices by collecting on loans that exceeded the usury limits in various states, and ordered it and its affiliates to pay a $10 million penalty, far short of the Bureau’s request. (Previously covered by InfoBtyes here and here.) The CFPB appealed, arguing that the district court erred by imposing a civil penalty that was “inappropriately low” and by refusing to order appropriate restitution. In its brief, the Bureau argued that the district court misapplied the law when finding that restitution was not “an appropriate remedy.” According to the Bureau, the district court believed it had discretionary power to deny restitution, based on the court’s view of the equities. But the district court had no such discretion, the Bureau asserted, claiming that if a plaintiff proves a violation and resulting harm, it is entitled to restitution under the CFPA. In addition, the Bureau argued that the district court should not have denied restitution on the grounds that the servicer had not acted in bad faith. The Bureau argued that allowing the servicer to earn $200 million in ill-gotten gains while paying a $10 million penalty leaves companies with “little incentive to follow the law.” The Bureau also argued that the loan servicer’s actions were reckless and warranted a higher civil penalty. The district court had concluded that the servicer did not act recklessly because its primary counsel opined that it could contract around state law. In response, the Bureau asserted that the servicer had “ample reason to know” its attempts to circumvent state usury laws posed an unjustifiably high risk that it was “collecting amounts consumers did not owe” after multiple lawyers warned the servicer that its attempts to avoid state law “likely” would not work.”