The CFPB announced its first public enforcement action against a payday lender—a consent order alleging, among other things, unfair and deceptive acts or practices in connection with affidavits. According to the consent order, the payday lender’s service provider engaged in unfair and deceptive practices by, among other things, manually stamping attorney and manager signatures on affidavits—a practice commonly named “robosigning.” The CFPB also found that the payday lender violated the Consumer Financial Protection Act by failing to preserve materials responsive to its requests; in particular, the payday lender failed to cease routine shredding of documents after receiving correspondence from the CFPB requesting it to preserve materials. Finally, the CFPB alleged that the payday lender violated the Military Lending Act by imposing an annual percentage rate above 36% on loans made to servicemembers.
The terms of the consent order require the payday lender to institute a compliance plan that, among other things: (1) addresses the manner of compliance with the order, consumer protection laws, and the MLA; and (2) includes written job descriptions of duties and responsibilities of key compliance staff. The payday lender is also required to deposit $8 million into a restitution fund for the purpose of redressing affected consumers.
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