On July 12, 2021 the Consumer Financial Protection Bureau (CFPB) announced that a consent order had been reached with an Atlanta-based non-bank lending company that would require the company to cancel up to $9 million in loans for consumers, resolving allegations that the fintech company violated the Consumer Financial Protection Act (CFPA) by originating and servicing unauthorized loans.
The CFPB alleges that the company engaged in unfair practices in violation of the CFPA by using merchants, typically those providing home improvements, to promote financing options to consumers and to make on-the-spot lending decisions. The company’s merchants are able to sign up consumers for loans through the company’s website or app. The CFPB alleges that the lending company’s careless business practices and lack of oversight allowed merchants to take advantage of consumers by signing thousands of consumers up for loans they did not authorize or request. Between 2014 and 2019, the company received about 6,000 complaints from consumers who did not authorize loan applications. Further, some consumers complained that they were not aware a loan had been taken out in their name or had even heard of the company before the consumers began to receiving billing statements and collection letters.
The consent order also requires the lending company to pay a $2.5 million civil penalty, and implement new procedures to prevent future fraudulent loans.
The post CFPB Reaches Consent Agreement with Fintech Company Concerning Facilitation of Loans to Consumers Without Their Authorization appeared first on Consumer Finance Enforcement Watch.