CFPB Sues Loan Co. for Lying to 9/11 First Responders, Others
Tue 26 Sep, 2017 / by McIntyre & Lemon / Client Alerts
09/26/17 – The Consumer Financial Protection Bureau (CFPB) took action against a loan company for lying in loan offerings to consumers who were awaiting payment from settlements in legal cases or from victim-compensation funds.
These consumers included former NFL players who are entitled to receive money from a settlement with the NFL for injuries suffered while playing professional football, individuals who were harmed by the Deepwater Horizon oil-rig accident and are entitled to payouts from settlements related to that incident, and first responders injured as a result of the Sept. 11, 2001, World Trade Center attack who were entitled to payments from the Zadroga Fund established by Congress.
The loan company is headquartered in Verona, New Jersey and marketed to consumers who were entitled to payments from legal settlements or victim-compensation funds. In its complaint, the CFPB alleges that the company offered loans to settlement or victim-fund recipients while lying about the cost of the loans in the long run. The CFPB also alleges that in marketing the loans, the company engaged in deceptive acts and practices, in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Specifically, the CFPB alleges that the company misled consumers:
- Into thinking that the company was the lender when it actually served as a broker for others, taking a commission when a consumer’s transaction was completed.
- About the cost of loans by telling consumers that they could obtain loans with a “2% Annual Percentage Rate” or “1% interest rate.” Instead, every loan that the company brokered was significantly more expensive for consumers.
- About how quickly they could receive funds. The company told consumers they could receive funds almost immediately—in many cases in as little as an hour. But it often took longer—typically weeks—for consumers to receive their funds.
- About the size and resources of the company. The company told consumers that it had attorneys and accountants on staff and offices in all 50 states. In fact, the company had no offices and no attorneys or accountants on its staff.
In a complaint and proposed consent order filed in federal court, the CFPB is seeking to require the company to pay $70,000 in civil money penalties to the CFPB’s Civil Penalty Fund. The proposed penalties take into account the defendants’ inability to pay more.