Washington, D.C. (May 25, 2021) - On March 3, 2021, the Consumer Financial Protection Bureau (CFPB or Bureau) filed a lawsuit that has significant implications for the payment processing industry.
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The CFPB recently entered into a proposed settlement of its lawsuit filed in California federal district court against a debt settlement company alleging that the company engaged in abusive acts or practices in violation of the Consumer Financial Protection Act and also violated the Telemarketing Sales Rule. In its complaint, the CFPB alleges that the company failed to disclose its relationship to certain creditors and steered consumers into high-cost loans offered by these affiliated lenders. The complaint alleges that the company regularly prioritized the settlement of debts owed to certain creditors over debts owed to unaffiliated creditors.
Each month, we host a 30-minute
webinar outlining the month s key announcements and takeaways from the Consumer Financial Protection Bureau (CFPB) for financial services providers to consider. In this month s article, we share some of our top bites covered during the April 21 webinar.
So what happened at the CFPB in the past month?
Bite #10 - The CFPB submitted its FDCPA report to Congress and took various FDCPA enforcement actions
The CFPB released the 2020 annual report to Congress on the administration of the Fair Debt Collection Practices Act (FDCPA). Among other highlights, the report notes the following CFPB accomplishments:
Identified several issues that raise the risk of consumer harm during the COVID-19 pandemic through its supervisory Prioritized Assessments;
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An online debt-settlement company settled CFPB allegations that the company steered consumers toward high-cost loans offered by
affiliated lenders and failed to disclose affiliations with
creditors.
In a Complaint filed in the U.S. District Court for
the Central District of California, the CFPB alleged that the
company told consumers it was not owned or operated by
any of the consumers creditors when, in fact, the company was
affiliated with two of the creditors: one through ownership, and
the other through loans and agreements. The CFPB also alleged that
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The CFPB announced earlier this week that it has entered into a proposed settlement of its lawsuit filed in a California federal district court against SettleIt, Inc., a debt settlement company, alleging that the company engaged in abusive acts or practices in violation of the Consumer Financial Protection Act and also violated the Telemarketing Sales Rule.
The proposed order requires SettleIt to pay consumer redress of at least approximately $646,000 and a $750,000 civil money penalty.
In its complaint, the CFPB alleged that SettleIt is affiliated with CashCall and LoanMe, creditors with whom it purports to settle debts on behalf of consumers. According to the complaint, SettleIt and CashCall are owned and controlled by the same individual and LoanMe has a financial relationship to that individual.