October 17, 2021

Volume XI, Number 290

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October 15, 2021

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October 14, 2021

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CFPB Sues Online Lender for Alleged Violations 2016 Consent Order

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.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 264
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About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm
Partner

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

213-617-4171
A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC
Associate

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...

202-747-2323
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