On September 27, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consent order with an online lender, after a joint investigation with the California Department of Business Oversight (DBO), over allegations that the lender deceptively marketed its loan products and hid the true cost of credit from consumers. Specifically, the consent order alleged that the lender represented that its loan products would rebuild a consumer’s credit, which would allow consumers to obtain “more money at better rates for longer periods of time.” But many of the lower-cost loan products were allegedly never made available to most consumers. The CFPB also alleged that the lender’s loan contracts for consumers in certain states represented that the lender would not charge extension fees to extend payment due dates, when in fact the lender did charges such fees. Finally, the CFPB alleged that the lender failed to incorporate certain fees into consumers’ annual percentage rates, and the lender failed to report consumers’ information to credit reporting agencies. To settle these alleged violations of the Consumer Financial Protection Act, Truth in Lending Act, and their implementing regulations, the lender agreed to pay a $1.8 million penalty to the CFPB and $1.83 million in redress to affected consumers, and to cease its allegedly unlawful practices.
In a separate settlement, also announced on September 27, the DBO resolved similar claims against the same lender for alleged violations of the California Deferred Deposit Transaction Law and the California Finance Lenders Law. To settle these allegations, the lender agreed to pay a $1.06 million penalty and to provide $1.62 million in refunds for affected consumers.