On May 11, 2017, the Federal Deposit Insurance Corporation (FDIC) announced a settlement with a Wisconsin bank and two affiliated institutions, resolving allegations that the three lenders violated Section 5 of the Federal Trade Commission (FTC) Act, which prohibits unfair and deceptive practices. The lenders allegedly violated this provision by: (1) charging interest to consumers who paid off their loans within six months, despite the fact that the loans were advertised as interest-free for the first six months; (2) selling add-on products without accurately disclosing the terms of those products; and (3) failing to provide consumers the opportunity to pay monthly premiums to finance the purchase of optional debt cancellation coverage on loans originated by the lenders.
One lender agreed to pay a civil money penalty of $151,000 as part of its settlement. The second lender agreed to pay a $54,000 civil money penalty as part of its settlement. And the third lender agreed to pay a $37,000 civil money penalty as part of its settlement. The lenders also agreed to pay $3 million in restitution (collectively) to consumers whose loans were originated by the lenders between 2013 and 2015 and were harmed by the allegedly unfair and deceptive practices, and further agreed to take affirmative steps to ensure compliance with the FTC Act.