CFPB Round 2: Agency Issues Consent Order for Violation of Prior Order

The Consumer Financial Protection Bureau announced, December 22, 2020, a consent order against a depository institution and related institutions based in significant part on allegations of violations of a previously issued consent order from July 2015 by misrepresenting material information to consumers and neglecting to provide all of the consumer redress as required by the 2015 Order.  Under the recent order, the institutions must pay at least $10 million in consumer redress and a $25 million civil money penalty.

The 2015 order, in which the company was ordered to pay $18.5 Million for illegal loan servicing practices, alleged violations of the Consumer Financial Protection Act of 2010 prohibiting unfair and deceptive practices.

More specifically the Bureau alleged that the institution violated the 2015 Order’s requirements by:

·        Misrepresenting the minimum loan payments consumers owed, the amount of interest consumers paid, and other material information, such as interest rates, payments, due dates, and the availability of rewards, among other things.

·        Failing to fully comply with the consumer redress requirements of the 2015 Order.

With the current order, the Bureau also alleged violations of the Electronic Fund Transfer Act and CFPA by withdrawing payments from more than 17,000 consumers’ accounts without valid authorization and by cancelling or not withdrawing payments for more than 14,000 consumers without notifying them.  Furthermore, the institutions were alleged to misrepresent to more than 100,000 consumers the minimum payment owed and to more than 8,000 consumers the amount of interest paid.  Some consumers ended up paying more than they owed, others became late or delinquent because they could not pay the overstated amount, while others may have filed inaccurate tax returns.

As a result of the recent order, the institutions are prohibited from making any misrepresentations about minimum payments consumers owe, the amount of interest consumers paid, and other material servicing terms.  The order also prohibits the institutions from withdrawing loan payments from consumers’ bank accounts in amounts or at times not authorized by consumers.

For more information, contact Troy Garris at 301-461-8952 or troy@garrishorn.com.