Newsroom

April 27, 2017

CFPB sues online lenders over debt collection

The CFPB this week filed suit against four online lenders for allegedly collecting debts they were not legally owed.

The CFPB said the action fell under the Dodd-Frank Act's prohibition against unfair, deceptive or abusive acts and practices (UDAAP) and that the companies violated the Truth in Lending Act.

The suit, filed in U.S. District Court for the Northern District of Illinois, accuses Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc., of deceiving consumers about loan payments that were not owed, collecting those payments and failing to disclose the real cost of the loans' annual percentage rates. The companies are based in Upper Lake, Calif.

The bureau said the high-cost loans in question had been made void by state licensing agreements and interest-rate cap regulations.

In other developments, Ocwen Financial is asking the U.S. District Court for the Southern District of Florida to declare the CFPB's structure unconstitutional and throw out the bureau's lawsuit against the company. NAFCU staff continue to monitor developments in PHH Corp.'s lawsuit against the bureau, which led to a three-judge panel declaring the bureau's structure unconstitutional in October 2016.