On December 16, 2016, the Consumer Financial Protection Bureau (CFPB) and Moneytree, Inc., which offers payday loans and other financial services, entered into a consent order that requires Moneytree to pay approximately $255,000 in restitution to consumers and to pay an additional civil money penalty of $250,000. The consent order concerns the CFPB’s allegations that Moneytree issued deceptive advertisements and collection letters and that it failed to obtain consumer authorization before withdrawing money from consumer accounts. According to the CFPB, these alleged violations were more egregious than they might otherwise have been because it had identified these issues during previous examinations of the company but Moneytree had failed to address them. Specifically, the consent order asserts that:
- From about February 3, 2015 through March 12, 2015, due to an error, Moneytree issued online advertisements that promised to cash tax refund checks for a fee of “1.99,” when the fee was actually 1.99 percent of the tax refund, and not $1.99. The CFPB took the position that “[p]rice figures with two decimal points used in advertisements for goods and services typically refer to dollar amounts,” and reasonable consumers could assume that “1.99” referred to a flat fee. The CFPB therefore concluded that these advertisements constituted deceptive acts or practices that violated sections 1031(a) and 1036(a)(1)(B) of the Consumer Financial Protection Act of 2010 (CFPA).
- From about November 2014 through March 2015, Moneytree sent collection letters to consumers saying that their vehicles could be repossessed if they failed to make payments that were past due on their installment loans. The CFPB concluded that these letters were deceptive because the consumers who received the letters did not have loans secured by their vehicles, so Moneytree was not entitled to repossess the vehicles. On or about March 31, 2015, Moneytree sent a notice to each consumer who received such a letter, which notice stated that the letter was erroneous and should be disregarded. Notwithstanding Moneytree’s attempt to take corrective action through the notices, the CFPB asserted that the collection letters also violated sections 1031(a) and 1036(a)(1)(B) of the CFPA.
- From about January 13, 2015 through January 19, 2015, hundreds of Washington residents entered into ACH payment agreements with Moneytree that did not contain language authorizing electronic funds transfers. Moneytree processed ACH debits from dozens of these consumers who had not authorized the debits. Although Moneytree refunded the debits, the CFPB concluded that this practice violated the requirement that preauthorized electronic fund transfers be authorized in writing or similarly authenticated under the Electronic Funds Transfer Act, 15 U.S.C. § 1693(a), and its implementing regulation, Regulation E, 12 C.F.R. § 1005.10(b).
This latest order is a good reminder of the importance of promptly addressing any issues identified during regulator examinations. And more fundamentally, it serves as a reminder to financial services providers to take steps to ensure the accuracy of their advertisements and communications with customers, and to make sure they are obtaining proper authorization from consumers before debiting their accounts.
The CFPB’s press release discussing the order is available here.
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