The CFPB recently filed a proposed consent order in federal court against a company for allegedly lying in offering loans to consumers based on the consumers’ anticipated settlement payouts. Notably, the consent order provides for civil money penalties not only against the company and its owner, but also against an individual who provided marketing services for the company but who was not an owner or employee of the company.
The CFPB asserts that the defendants contacted consumers, who were former NFL players suffering from neurological disorders, victims of the Deepwater Horizon oil rig disaster, and 9/11 first responders, after those individuals were awarded, but before they received, payouts from settlements or victim-compensation funds. The company offered them loans that were to be repaid from the settlement proceeds or victim-compensation funds. The CFPB alleges that the company’s owner contracted with the other individual defendant to recruit consumers on behalf of the company by offering consumers loans on websites that the individual defendant owned and operated, but which were presented as websites of the company.
The specific deceptive acts and practices alleged by the CFPB are that the defendants offered loans to consumers while lying about: (1) the cost of the loans; (2) how quickly consumers would receive the funds; (3) the company being a lender who could make these loans (the company was a broker, not a lender); and (4) the size and resources of the company. The consent order, which still must be approved by the court, would: (1) prohibit the defendants from offering or providing loans or advances to consumers awaiting payments from settlements or victim-compensation funds in the future; (2) require the company and its owner to pay $60,000 in civil money penalties; and (3) require the individual defendant who was contracted to provide marketing services for the company to pay $10,000 in civil money penalties.
A copy of the Complaint can be found at: http://files.consumerfinance.gov/f/documents/201709_cfpb_top-notch_complaint.pdf.
A copy of the consent order can be found at: http://files.consumerfinance.gov/f/documents/201709_cfpb_top-notch_proposed-consent-order.pdf.