CFPB and States File Suit Against High-Interest Credit Brokers
The Consumer Financial Protection Bureau, South Carolina Department of Consumer Affairs, and Arkansas Attorney General have filed suit against two individuals and a law firm. The CFPB indicated that the lawsuit follows actions against a number of other individuals and companies in 2019. The current suit alleges that the defendants provided substantial assistance to the deceptive acts of the prior defendants.
According to the Bureau, the prior actions involved acts where high-interest credit offers were made to disabled veterans without disclosing that the products they were credit products. Allegedly, the products allowed disabled veterans to receive a lump sum payment in exchange for future disability benefits. The Bureau asserts that federal law prohibits agreements where a person acquires a right to receive a veteran’s pension or disability payments. The allegations also indicate that the defendants in the current action were involved in pre-approving, underwriting, executing and processing payments for customers.
It is interesting to highlight a couple of underlying points. First, the CFPB continues to use its UDAAP authority to enforce cases but in areas where the CFPB states that the law is clear. In this case, the Bureau asserts that the products in question are explicitly prohibited by federal law and that the defendants attempted to conceal that the products were credit products. Secondly, the Bureau continues to work closely with state regulators in these actions.
Persons involved in this highly regulated industry should remain vigilant to ensure that they stay times in compliance with the various federal and state laws applicable to their activities, and continuously monitor and strengthen their systems to avoid violations.
Garris Horn frequently provides guidance on CFPB and state enforcement matters. For more information on this case, or to discuss related matters, contact Troy Garris directly at 301-461-8952 or troy@garrishorn.com.
