On January 18, the CFPB filed a proposed final judgment against an Illinois-based third-party payment processor and its founder (collectively, “defendants”), which ceased operations almost three years ago, settling claims that the defendants facilitated payments for telemarketing fraudsters targeting seniors.

Continue Reading CFPB Bans Payment Processor for Engaging in Fraudulent Practices

On January 13, the FTC announced that a leading business credit report provider agreed to settle allegations that it had engaged in deceptive and unfair business practices.  The FTC alleged that businesses complained of costly errors in the credit reports, which the company failed to remedy.  Additionally, the company’s suite of credit-improving products costing business hundreds or thousands of dollars per year failed to provide any real benefit to businesses.  Also, the company’s telemarketers deceptively pitched another service to businesses and falsely claimed that the businesses had to purchase the service for the company to complete the business’s credit profile.  Finally, the company allegedly did not disclose to businesses that the service’s subscription is automatically renewed each year, nor did it properly disclose other renewal practices that led to increasing costs.

Continue Reading FTC: Provider of Business Credit Reports Engaged in Deceptive and Unfair Practices, Refunds Customers

On January 5, the FTC announced that two defendants will be permanently banned from the merchant cash advance and debt collection industries, and required to pay $675,000 to resolve allegations that they used deceptive and illegal means to seize assets from small businesses, non-profits, and religious organizations.  The order results from a 2020 complaint against two New York-based companies engaged in small-business financing, along with several of their owners and officers.

Continue Reading FTC Bans Merchant Cash Advance Provider from Industry

On December 17, the CFPB filed a proposed stipulated final judgment and order against a limited liability company, its principals, and an attorney who allegedly provided advisory services to consumers who sold structured settlements to the company.   The CFPB alleged that the company steered consumers to consider signing away future structured settlement payments for lump-sum payments, and to receive “independent advice” from an attorney who was paid directly by the company who indicated to consumers that the transactions required very little scrutiny.

Continue Reading CFPB Takes Action Against Purchaser of Structured Settlements

On December 21, an online lending fintech agreed to a stipulated final judgment with the CFPB to resolve a September 2021 complaint alleging that the company deceived consumers and violated the Equal Credit Opportunity Act (“ECOA”) (we discussed this complaint in an earlier Consumer Finance & FinTech Blog post here).  The stipulated final judgment prohibits the company from making new loans, collecting on outstanding loans to harmed consumers, selling consumer information, and making misrepresentations when providing loans or collecting debt or helping others that do so.  The company also agreed to a $40,500,000 suspended monetary judgment, and a $100,000 civil penalty based on its limited ability to pay.

Continue Reading CFPB Closes Online Lending Fintech for Violating ECOA and CFPB Consent Order

On December 14, the California Department of Financial Protection and Innovation (DFPI) announced that it entered into a consent order with an LA-based auto title lender to resolve allegations that the company violated California’s the Fair Access to Credit Act’s (FACA), which prohibits making loans of $2,500 to $10,000 with interest rates greater than 36 percent.  The focus of the consent order was the auto title lender’s partnership with a Utah state-chartered bank to provide the bank with marketing and servicing services in connection with auto title loans offered to California consumers.  The company offered these services at the same time that FACA amended the California Financing Law to prohibit licensed lenders from making loans with principal amounts of $2,500 to less than $10,000 with interest rates greater than 36 percent, plus the federal funds rate.  The company was served a subpoena seeking documents and information last year to assess whether the company was evading California’s newly enacted interest rate caps through a partnership with the out-of-state bank.  After the investigation, the company ceased marketing auto loans of less than $10,000 to California borrowers.

Continue Reading DFPI Issues Consent Order to Auto Title Lender

On December 16, 2021, the Office of the Comptroller of the Currency (“OCC”) and the Financial Crimes Enforcement Network (“FinCEN”) issued civil monetary penalties against a Texas community bank for violations of the Bank Secrecy Act (“BSA”).  The consent orders read like a veritable “how not to” for reviewing anti-money laundering alerts.

Continue Reading OCC and FinCEN Issue $9 Million in Penalties for BSA-AML Violations

In its first action under newly-appointed Director Rohit Chopra, the CFPB issued an enforcement action against a prison financial services company for violating the Consumer Financial Protection Act (CFPA) by allegedly charging consumers fees to access their own money on prepaid debit cards that consumers were forced to use.  The consent order also claims that the company violated the Electronic Fund Transfer Act (EFTA) when it required consumers to sign up for a debit card as a condition of receiving government benefits – in particular, “gate money,” which is money provided under state law to help people meet their essential needs as they are released from incarceration.

Continue Reading First CFPB Enforcement Action Under New Director: $6 Million Fine Against Prison Financial Services Company

Ahead of an upcoming merger between a digital banking platform and a special purpose acquisition company, both parties disclosed in a regulatory filing last week that the platform received a Civil Investigative Demand (“CID”) in June 2020 related to its “cash paycheck advance business in compliance with the prohibition against UDAAPs, the EFTA, and, to the extent it applies, the Truth in Lending Act.”  According to the filing, the platform provided the CFPB with all information and documents required by the CID, and on September 27, 2021, the CFPB staff notified the company that it currently did not intend to recommend that the CFPB take any enforcement action.

Continue Reading CFPB Opts Not to Take Action Against Banking App

On September 20, the CFPB filed a lawsuit in federal district court against a California-based software company and its owner for allegedly violating the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act of 2010 (CFPA) by providing substantial assistance or support to credit-repair businesses that use telemarketing and charge unlawful advance fees to consumers.

Continue Reading CFPB Alleges that Service Provider Helped Credit-Repair Businesses Charge Illegal Fees

Last month we wrote a blog relating to a consent order entered into by the California Department of Financial Protection and Innovation (DFPI) with a servicer of income share agreements.  The DFPI determined that, despite claims by the provider to the contrary, the income share agreements are student loans that subject the provider to California’s licensing requirements.  It did not take long for the CFPB to enter the fray.  On September 7, the CFPB entered into a consent order with Better Future Forward, Inc. and various affiliates (collectively BFF) in which the CFPB determined that the company:

Continue Reading Are Income Share Agreements Loans? The CFPB Says Yes