Consumer Law & Policy Blog

CFPB settles deceptive marketing case with payday lenders (for $0)

The Consumer Financial Protection Bureau today filed a proposed settlement with several payday lenders: NDG Financial Corp., E-Care Contact Centers, Ltd., Blizzard Interactive Corp., New World Consolidated Lending Corp., New World Lenders Corp., Payroll Loans First Lenders Corp., New World RRSP Lenders Corp., Northway Financial Corp., Ltd., and Northway Broker, Ltd., as well as several corporate officials.

The CFPB alleges that the defendants, all based in Canada and Malta, violated the Consumer Financial Protection Act "by misrepresenting to consumers in states where loans offered by the defendants violated state licensing or usury laws that they were obligated to repay loan amounts when such an obligation did not exist because state law voided the loan." The defendants also misrepresented that the loan agreements were not subject to United States federal or state law; misrepresented that non-payment of debt would result in lawsuits, arrests, imprisonment, or wage garnishment; and conditioned loan agreements upon irrevocable wage assignment clauses, which the Bureau alleges violated the Credit Practices Act.

Under the agreement, the defendants are permanently barred from advertising, marketing, promoting, offering, originating, servicing, or collecting any consumer loan issued to any consumer residing in the United States.

The defendants will pay no monetary penalty.

CFPB issues $1 fine for scamming veterans

I missed this last week: The Consumer Financial Protection Bureau settled a case against Mark Corbett, a broker of contracts offering high-interest credit to veterans. The CFPB explained that it "found that Corbett violated the Consumer Financial Protection Act of 2010 by misrepresenting to consumers that the contracts he facilitates are valid and enforceable when, in fact, the contracts are void because veterans’ pension payments are unassignable under federal law; misrepresenting to consumers that the offered product is a purchase of payments and not a high-interest credit offer; misrepresenting to consumers when they will receive their funds; and failing to disclose to consumers the applicable interest rate on the credit offer."

The penalty for this string of wrongdoing? Corbett agreed not to broker, offer, or arrange "agreements between veterans and third parties under which the veteran purports to sell a future right to an income stream from the veteran’s pension." And he will pay a civil penalty of $1.00.

Hmm. $1.00.

As the Center for Responsible Lending noted, this agreement came a few days after CFPB Director Kraninger announced that the CFPB will not monitor lenders to verify compliance with the Military Lending Act--a law that protects military servicemembers and their dependents from predatory loans.