Consumer Finance Insights
May 20, 2015

CFPB Files Complaint Against Online-Payment Services

On May 19, 2015, the Consumer Financial Protection Bureau (CFPB) issued an announcement and released remarks prepared by Director Richard Cordray regarding a complaint filed by the CFPB against California and Maryland based online-payment services.  The complaint, filed May 19 in the U.S. District Court for the District of Maryland, alleged that the companies violated certain provisions of the Consumer Financial Protection Act, 12 U.S.C. § 5536, by failing to honor advertised promotions, misprocessing consumers’ payments, and engaging in other allegedly deceptive and unfair practices relating to consumer enrollment, fees, and billing disputes.

The complaint also alleged that the companies engaged in abusive practices by applying consumers’ credit payments to balances with promotional interest rates first.   According to the complaint, the companies misinformed consumers about how payments were applied and ignored consumer requests to allocate payments to balances with higher interest rates.

The CFPB seeks restitution to consumers, disgorgement of allegedly ill-gotten revenues, civil money penalties, and injunctive relief.  The CFPB also proposed a consent order that would impose certain requirements on the companies’ practices for offering, marketing, and providing services to consumers.  Furthermore, the proposed consent order would require the companies to pay $15 million in redress to affected consumers and $10 million to the CFPB in civil money penalties.