The CFPB recently filed a complaint against an online installment and single-payment lender alleging that it violated the terms of a 2016 consent order that previously required the company to pay millions in consumer redress and a civil penalty and to stop misleading consumers with false claims about the cost of loans and the benefits of repeated borrowing.

In its complaint, the CFPB alleges that the lender continued with much of the same illegal and deceptive marketing.  In particular, the complaint alleges that the company violated the CFPB’s 2016 consent order, the CFPA, and ECOA/Regulation B by, among other things:

  • Misrepresenting the benefits of repeatedly borrowing from the company by advertising that borrowers who did so would gain access to larger loans at lower rates when, in fact, that was not true for tens of thousands of consumers.
  • Failing to provide adverse-action notices within the 30 days required by ECOA for over 7,400 loan applicants. The company also issued over 71,800 adverse-action notices that failed to accurately describe the main reasons why the company denied the application as required by ECOA and Regulation B.

The CFPB is seeking an injunction, damages or restitution to consumers, disgorgement of ill-gotten gains, and the imposition of a civil money penalty.

Putting It Into Practice:  Consistent with the theme of regulation by enforcement, this latest CFPB consent order should be read as a signal to the consumer lending industry to take extra precautions to avoid the alleged missteps of ECOA and Regulation B.