On July 12, 2022, the CFPB filed Complaint Seeking a permanent court order and other forms of legal protection against a major payday lender for unfair, fraudulent, and abusive actions in violation of the CFPA.
The CFPB alleges that the payday lender concealed free repayment plans from consumers. The CFPB alleges that the payday lender initially only offered consumers short grace periods or refinance plans for a fee, even though consumers had a contractual right to a free repayment plan. Prior to March 2020, the payday lender had a policy that only offered the free repayment plan after the customer declined the first two offers in the “payment option waterfall.” While the CFPB’s payday lender pledged to revise its practices by March 2020, the CFPB claims it has not done so to date.
In addition, the CFPB alleges that the payday lender misrepresented the frequency with which it would attempt to debit borrowers’ bank accounts in repaying loans and fees. The payday lender received approval in some cases to reinitiate debit card transactions up to two times after an unsuccessful withdrawal attempt, but instead its practice was to reinitiate the withdrawal attempt up to three times. As a result, the CFPB alleges that the payday lender’s withdrawals from the borrower’s accounts on the third reinitiation were made without authorization.
The CFPB seeks permanent injunctive relief, redress, disgorgement, damages, civil penalties and other remedies. The payday lender has not yet filed a response to the complaint.