The CFPB recently obtained a fintech company’s agreement to settle its enforcement lawsuit with the termination of all lending and servicing of loans by that company and payment of a $100,000 penalty. The company announced on its website that it “is no longer lending or servicing loans” and that “all outstanding debts have been forgiven and no future collection attempts will be made.”
In announcing the settlement, CFPB Director Rohit Chopra said, “We are shuttering the lending operations of this fintech for repeatedly lying and illegally cheating its customers.” These alleged lies include the deception of the company’s borrowers with regard to the benefits of repeatedly taking loans from the company—this fintech company had a unique ladder system in which it told its borrowers that if they pay back their initial smaller, higher-interest rate loans and take online classes about debt and financial management, they will then qualify for larger, lower-interest rate loans from the company. According to the CFPB, most of those customers were never actually afforded this benefit.
The court must still approve the settlement before it can be considered final. The CFPB’s previous enforcement actions against this fintech company have been covered by WBK here and here.