On March 27, 2019, the Alabama Attorney General (“Alabama AG”), Alabama State Banking Department, and the Director of the Alabama Securities Commission announced that they filed a complaint against a Nevada-based lender and its CEO (“Defendants”) for allegedly making loans at unlawful interest rates to desperate consumers in exchange for their pension benefits in violation of the Alabama Small Loan Act, the Alabama Consumer Credit Act, the Alabama Securities Act, and the Alabama Deceptive Trade Practices Act.
According to the Alabama AG, the lender deceived both consumers and investors. The lender allegedly convinced retirees to sell their pensions through deceptive marketing and advertising in exchange for short-term unlicensed loans, many of which were made at unlawful interest rates. The lender then bundled and marketed “structured cash flows” to investors across the nation, including in Alabama. The lender allegedly represented to investors that it could provide higher returns and mitigated risk. However, according to the Alabama AG, no reserve accounts existed and investors did not receive returns on their investments. The Alabama enforcement agencies are seeking an injunction to stop the alleged activities.
Enforcement Watch has previously covered actions involving these online payday lenders, including one action involving the Consumer Financial Protection Bureau here, and other actions by state attorneys general here, here, and here.