Davis

Must a creditor who imposes a flat finance charge that does not vary with the term of a Refund Anticipation Loan refund a portion of the charge as “unearned interest” under 15 U.S.C. § 1615 when the loan is repaid earlier than anticipated in the loan agreement? Concluding that the finance charge in question is not an “interest” charge, we answer no and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Felicia Davis (“Davis”) brought this action for herself and others similarly situated against Pacific Capital Bank, N.A., (“Pacific”) under California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 . Davis alleges she obtained a “Refund Anticipation Loan” (“RAL”) secured by her anticipated federal income tax refund, which Davis authorized the Internal Revenue Service to deposit into an account established by Pacific. The loan document, attached as an exhibit to Davis’s complaint, provided that $1,115 was credited to Davis, the credit would cost $85, the Annual Percentage Rate “cost of [the] credit at a yearly rate” was 57.969%, and that one payment of $1,200 would be due forty-eight days after Pacific approved the loan. The loan document provided that, if Davis repaid the loan…