CFPB Announces $2.175 Million Settlement With Company Offering Installment Loans | Goodwin
On December 30, 2020, the Consumer Financial Protection Bureau (CFPB) announcement that he had entered a consent order with a lender who provided installment loans to military-affiliated consumers due to the lender’s alleged violations of the Military Loans Act (MLA), the Electronic Funds Transfer Act (EFTA) and Consumer Financial Protection Act of 2010 (CFPA).
According to the CFPB, the company issues tens of thousands of loans each year, with individual loans normally ranging from $500 to $10,000. The CFPB alleged that since October 2016, for loans to those affiliated with the military, the company had violated the MLA’s prohibition on requiring loans to be repaid by “attribution”. The allocation system, run by the Department of Defense, allows service members to allocate a portion of their salary to designated recipients. With respect to consumers not covered by the MLA, the CFPB also alleged that the company violated EFTA and CFPA in its loan offering by requiring borrowers to provide bank account information and authorizing the company to remove missed payments from these accounts on the first business day following the missed payment.
The consent order requires the company to pay a civil penalty of $2.175 million.