The CFPB has announced that it is resolving an investigation and entering an order against one of the nation’s largest payday lenders for inducing payday borrowers into a cycle of debt. The CFPB believes the payday lender used illegal debt collection tactics – including harassment and false threats of lawsuits, or criminal prosecution – to bully overdue borrowers with a demonstrated inability to repay their existing loans into taking out new payday loans with expensive fees. Under the terms of the order, the payday lender will pay $10 million in restitution and penalties to address the conduct at issue.
Under the Dodd-Frank Act the CFPB was granted authority to supervise payday lenders—the first federal agency granted such powers. This announcement was one of the first of a handful of case where the CFPB used its new authority to prohibit “abusive” practices.
Read the consent order.