- Source: consumerfinance.gov
Treliant’s professionals are ready to assist with your corporate and regulatory compliance needs. We understand how to make your compliance programs work effectively to comply with federal consumer financial laws. As regulatory enforcement continues to expand, it’s more imperative than ever to ensure your organization is compliant.
In 2016, the Consumer Financial Protection Bureau (CFPB) ordered a large FinTech lender to pay millions in penalties and consumer redress for misrepresenting the benefits of borrowing and access to its loan products. On September 8, 2021, the Bureau filed a lawsuit against the lender for violating the 2016 consent order and continuing to deceive borrowers. The lender advertised access to lower interest rates and larger loan amounts to repeat borrowers if they repaid their loans on time and climbed the company’s “ladder”. The CFPB alleges that the lender:
- Misled consumers about the benefits of repeat borrowing: The Bureau’s investigation revealed that not only did repeat borrowers receive the same or higher interest rates after completing the advertised tasks, many repeat borrowers also had their maximum loan size reduced, even after moving up the ladder.
- Failed to provide timely and accurate adverse-action notices. For over 7,400 applicants, the lender failed to provide adverse-action notices required by the Equal Credit Opportunity Act (ECOA) within 30 days of receiving the completed application. The lender also issued 71,800 inaccurate adverse-action notices, misstating the principle reasons why applications were denied, as required by ECOA and Regulation B.
- Violated the Bureau’s 2016 consent order: The 2016 order prohibited the lender from misrepresenting the benefits of borrowing. The continued deceptive marketing and associated claims regarding the benefits of repeat borrowing violate the order.
The CFPB is seeking that the lender be ordered to pay damages, restitution, and other monetary relief to consumers. This lawsuit is evidence of expanding regulatory intensity under the Biden administration.