On April 27, 2017, the Consumer Financial Protection Bureau (CFPB) announced the filing of a suit against four online lenders alleging that the lenders illegally collected debts on invalid loans. The complaint alleged violations of the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5531(a), 5536(a), and 5564(a), and the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq., for engaging in unfair, deceptive, or abusive acts and for improper disclosures.
In its complaint, the CFPB alleges that loans were invalid—in whole or in part—across 17 states. In some states, the loans were allegedly void because the lenders failed to obtain proper lending or debt collection licenses. In others, the high interest rates of 440 percent to 950 percent allegedly violated state usury laws, thus voiding all or part of the loans. Based on these allegations, CFPB asserts that the lenders deceived customers and collected payments on loans that were never due. The complaint also alleged that the lenders did not properly disclose annual percentage rates on its website.
The CFPB seeks a permanent injunction, monetary damages, disgorgement, civil penalties, and costs.