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CFPB Fines Online Lead Aggregator for Facilitating Illegal Loans

Fri 20 Oct, 2017  /  by McIntyre & Lemon  /   Client Alerts

10/20/17 – Last month, the CFPB took action against an online lead aggregator for allegedly steering consumers toward lenders who offered illegal or unlicensed loans that were void in the consumer’s state.

According to the Consumer Financial Protection Bureau (CFPB), the lead aggregator sold consumers’ payday and installment loan applications to lenders it knew were likely to make void loans.

Generally, lead aggregators buy consumer information—called leads—from lead generators who operate websites that market payday and installment loans. The aggregators then sell the leads to purchasers, typically payday or installment lenders. In this case, the CFPB alleged that the company regularly sold leads for consumers located in states where the resulting loan was void.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB can take action against a company for engaging in an unfair, deceptive, or abusive acts or practices. The CFPB determined that the company committed an abusive practice by selling loan applications to lenders that were likely to lend with interest rates that exceed state usury limits or to lenders who were not licensed in the state where the consumer resided. Specifically, the CFPB’s consent order requires the company to:

  •  Ensure loans resulting from applications it sells are not void: the company must take reasonable steps to ensure that loan applications it sells do not result in consumer loans that are void under the laws of the consumer’s state of residence.

The CFPB ordered the company to pay a $100,000 penalty to the Consumer Bureau’s Civil Penalty Fund.

CFPB Press Release; Consent Order.