On June 6, 2016, the Consumer Financial Protection Bureau (CFPB) announced it filed a lawsuit against a third-party payment processor and two of the company’s executives over allegations the company permitted unauthorized withdrawals from consumer accounts, in violation of the Dodd-Frank Consumer Protection Act. The company facilitated ACH payment transactions between clients and consumers’ bank accounts. The company’s clients include payday and auto title lenders, some of whom allegedly could not establish relationships with traditional banks. According to the CFPB, the company willfully ignored numerous signs that some of their clients were requesting illegal or fraudulent transactions, including unauthorized ACH transaction requests. The company allegedly ignored complaints from consumers, high return rates and law enforcement actions against clients alleging financial fraud. The CFPB alleged the company processed millions of dollars in unlawful and unauthorized transactions. The CFPB seeks to permanently enjoin the company from future violations of the Consumer Protection Act, restitution to affected consumers, and civil monetary penalties. The company has not had an opportunity to respond to the allegations.
Blog Enforcement Watch June 10, 2016