CFPB Sues Four Online Lenders for Illegal Debt Collection
05/05/17 – The Consumer Financial Protection Bureau (CFPB) has taken action against four online lenders for deceiving consumers by collecting debt consumers did not legally owe.
In a suit filed in federal court, the CFPB alleges that the four lenders could not legally collect on these debts because the loans were void under state laws governing interest rate caps or the licensing of lenders. The CFPB alleges that the lenders made deceptive demands and illegally took money from consumer bank accounts for debts that consumers did not legally owe.
Since at least 2012, the California-based online installment loans companies have offered online loans of between $300 and $1,200 with annual interest rates ranging from 440 percent up to 950 percent.
The Bureau’s investigation showed that the lenders violated licensing requirements or interest-rate caps—or both—that made the loans void in whole or in part in at least 17 states. The CFPB’s suit alleges that the defendants violated the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act by deceiving consumers about loan payments that were not owed, collecting loan payments which consumers did not owe, and failing to disclose the real cost of credit.
The CFPB is seeking monetary relief for consumers, civil money penalties, and injunctive relief, including a prohibition on collecting on void loans, against the lenders.