Loan Brokerage Firm Agrees to $70,000 Settlement with CFPB Over Personal Loans Made to Recipients of Victim Compensation Funds

CFPB

On September 19, 2017, the Consumer Financial Protection Bureau (“CFPB”) announced a simultaneous complaint and proposed consent order with a loan brokerage company and two associated individuals (the “Defendants”).  The Defendants are alleged to have made misrepresentations concerning the brokerage and the loan terms they offered to potential borrowers.  According to the CFPB, the Defendants focused their efforts on the recipients of legal settlements or victim-compensations funds, such as former National Football League players suffering from neurological disorders, victims of the Deepwater Horizon oil-rig disaster, and 9/11 first responders.

The complaint, filed in the United States District Court for the Southern District of New York, alleged that the Defendants: held themselves out as a lender, even though they were a broker who did not make loans; misrepresented the interest rates for the loans as 1 or 2 percent (according to the CFPB, the rates were greater than 20 percent on average); misrepresented how quickly borrowers would receive funds, claiming it would take one hour when in reality it often took weeks; and misrepresented the resources of the company, which, rather than operating in all 50 states, had no offices and employed no accounting, financial, or legal staff.  The CFPB claimed that these acts violated the Consumer Financial Protection Act’s (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1)(B), prohibition on providing consumers with materially misleading information.

In the proposed consent order concurrently filed by the CFPB and the Defendants, the Defendants neither admitted nor denied liability, but agreed to permanently cease operations in providing financial services to consumers entitled to settlement or victim-compensation fund payments.  The Defendants also agreed to pay civil monetary penalties totaling $70,000.

Download PDF

Tagged with 

Comments are closed.