In a recent development, the Consumer Financial Protection Bureau (CFPB) has issued a hefty penalty on a small-dollar lender based out of Chicago, enforcing a consent order from 2019 which the lender allegedly violated. The penalty is set at an astonishing $15 million, marking the serious nature of the violation. Orrick, Herrington & Sutcliffe LLP provides a detailed explanation on JDSupra.
Along with the charge of ignoring the 2019 order, the lender is accused of independently breaking the Consumer Financial Protection Act (CFPA). The initial 2019 consent order came as a result of the lender’s practice of withdrawing funds from consumers’ bank accounts without prior permission. Further, it reportedly failed to honor loan extensions that had been agreed upon.
Specifically, the lender supplanted the bank account information of consumers, which was used to make payments for existing loans, with distinct account data provided by a “lead”. The term “lead” here signifies a third-party agency, typically involved in the generation of customer or consumer intelligence.
It’s vital to note, though, that the details surrounding the specifics of the violations are not clear at this moment. More comprehensive information is expected to emerge in the coming weeks, shedding light on the actions of the lender and the CFPB’s response.
As regards the actions of corporate law institutions and global multinationals, this case serves as a pivotal reminder of the significance of compliance and the strict oversight exercised by regulatory bodies. Given this, it’s more imperative than ever for legal professionals to ensure their organizations’ activities are within legal boundaries at all times.