On December 21, 2021, the Consumer Financial Protection Bureau (CFPB) announced that it reached an agreement with a California-based fintech company that would require the company to cease “(1) making new loans; (2) collecting on outstanding loans to harmed consumers; (3) selling consumer information; and (4) making misrepresentations when providing loans or collecting debt or helping others that are doing so.” If entered by the court, the stipulated final judgment and order will require the company to pay $40,500,000 to the CFPB for the purposes of providing consumer redress, and a $100,000 civil monetary penalty to the CFPB.
The agreement would resolve a September 2021 lawsuit brought by the CFPB in the U.S. District Court for the Northern District of California alleging that the lender violated the Consumer Financial Protection Act of 2010, 12 U.S.C. §§ 5531(a), 5536(a)(1)(A) (CFPA), the Equal Credit Opportunity Act (ECOA), 15 U.S.C. §§ 1691–1691f, and Regulation B, 12 C.F.R. § 1002.9(a)–(b). The CFPB’s complaint also alleged that the company was in violation of a 2016 CFPB order by continuing illegal and deceptive marketing practices, deceiving consumers about the benefits of repeat borrowing, and failing to provide notices required by fair lending laws.
According to the CFPB, the lender–which was backed by prominent venture capital investors–offered single-payment and installment loans to consumers online that it marketed as an alternative to payday loans. The CFPB alleged that the lender marketed a program of free courses and told consumers that after completing courses, they would be eligible for lower interest rates and larger loan amounts on any future loans. However, according to CFPB, despite completing the courses, consumers did not qualify for larger loans and were offered similar or less favorable interest rates.
The post CFPB Reaches $40.6 Million Agreement With Lender to Cease Operations appeared first on Consumer Finance Enforcement Watch.