CFPB Settles With Payday Lender for $100,000

​On February 5, the Consumer Financial Protection Bureau (CFPB) announced a settlement with a regional retail payday lender, resolving allegations that the lender violated the Consumer Financial Protection Act (CFPA).  Specifically, the CFPB alleged that the lender failed to take adequate steps to prevent unauthorized charges; failed to promptly monitor, identify, correct, and refund overpayments made by consumers; placed collection calls to third parties named as references on borrowers’ loan applications, which disclosed or risked disclosing borrowers’ debts to those third parties; misrepresented that it collected third-party references from borrowers on loan applications for verification purposes, when in fact it was using that information to make marketing calls; and advertised unavailable services (such as check cashing).

The CFPB also alleged that the lender violated the Truth in Lending Act and Regulation Z by failing to include all fees charged to certain customers in the annual percentage rate (APR) in loan contracts and advertisements; rounding APRs to whole numbers in advertisements; and publishing advertisements that included an example APR and payment amount without disclosing the corresponding repayment terms it had used to calculate that APR.

Pursuant to the consent order, the lender agreed to pay a civil money penalty of $100,000.