CFPB sues payday lender for allegedly concealing free repayment plans | PC Weiner Brodsky Kider
On July 12, 2022, the CFPB filed a complaint seek a permanent injunction and other forms of relief against a major payday lender for unfair, deceptive and abusive acts in violation of the CFPA.
The CFPB alleges the payday lender concealed free repayment plans from consumers. The CFPB says the payday lender initially only offered consumers short grace periods or refinance plans for a fee, even though consumers had a contractual right to a free repayment plan. Prior to March 2020, the payday lender had a policy in place that only offered the free repayment plan after the customer rejected the first two offers in the “payment option cascade.” While the payday lender has committed to the CFPB to review its practices by March 2020, the CFPB claims it has not done so to date.
Additionally, the CFPB alleges the payday lender misrepresented how often it would try to debit borrowers’ bank accounts when repaying loans and fees. The payday lender was allowed to retry debit card transactions up to two times after an unsuccessful withdrawal attempt in some cases, but its practice was instead to retry the withdrawal attempt up to three times. In doing so, the CFPB alleges that the withdrawals made by the lender from the borrowers’ accounts during the third reopening were unauthorized.
The CFPB seeks a permanent injunction, restitution, restitution, damages, civil monetary penalties and other relief. The payday lender has yet to file a response to the complaint.