It comes as no surprise to find that the Consumer Financial Protection Bureau (CFPB) is consistently on the move to put pressure on the payday lending industry. With that being said, the CFPB recently filed a complaint against several jointly owned payday lending locations. The complaint alleges that the defendants have engaged in deceptive, abusive, unfair acts and business practices that are in direct violation of the Dodd-Frank Wall Street and Consumer Protection Act. A group of commonly owned companies, based in Malta and Canada, are alleged by the CFPB to have been engaged in a lot of unlawful practices, including collecting on loans that were void, lodging false representations with regards to nonpayment of debt and using illegal wage-assignment clauses in their loan agreements. The CFPB believes that these illegal clauses allow the lenders to take loan payments from the borrowers’ employers’ payroll systems.
The CFPB complaint is looking for refunds, restitution and injunctions to prevent future illegal lending acts. It comes as a surprise to see the CFPB reaching beyond United States borders. However, according to the Director of the CFPB, Richard Cordray said, “Companies making loans within the U.S. have to comply with federal law, and the Consumer Bureau will work to ensure that American consumers receive the protections and fair treatment they deserve.”
NDG Enterprise is a company with operations based in Canada and Mexico. However, NDG does offer Internet payday loans to people in all 50 states. This company has been targeted by the CFPB, with complaints that they engaged in unlawful lending practices, including the collection of funds that customers do now owe. These allegations go back as far as the summer of 2011. Most of the loans were given for 14 day terms and ranged in amount from $100 to $1500. The finance charges for these loans ranged from $19.98 to $26.98 for every one hundred dollars that people borrowed, according to the Consumer Financial Protection Bureau. The loan fees made these loans illegal according to the varying state laws. The CFPB claims that this fact makes the collection of the loans unlawful. The CFPB also stated that the defendants lacked the proper licenses to provide these loans, and that they violated the laws of dozens of state
The New York federal court filed a complaint that charges the defendants with violations of the Credit Practices Rule and the Dodd Frank Wall Street Reform and Consumer Protection Act. These two laws prohibit the use of deceptive, unfair or deceptive lending practices.
To make restitutions the CFPB has requested that the defendants pay monetary fines and that they provide financial refunds to consumers who received loans from these lending companies. Additionally, the complaint requests that future violations be prohibited and that the lending companies adhere to prohibitions against abusive, unfair, deceptive financial practices. The Consumer Financial Protection Bureau is the newest federal agency to be created, but it operates in such a way as to push its weight around when deemed necessary. Regardless of how someone feels about the short term lending industry, and the government groups that police such industries, it is troubling to see the CFPB taking action against companies that operate outside of the United States. The bureau has already earned a reputation for having a personal vendetta against companies in the US. It now looks like the CFPB is going to stick its nose into the business practices of companies that operated outside of our country. One has to wonder when the government is going to step in and hold the CFPB accountable for its gung-ho approach to business regulation.
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