BCFP Files Suit Against Lump Sum Advancement Company

The BCFP filed a complaint against a lump sum advancement company and other related companies alleging violations of the Consumer Financial Protection Act of 2010 and the Truth in Lending Act.

The BCFP alleged the defendants: (1) violated the CFPA by deceptively misrepresenting that the product being sold was not a loan, did not have an interest rate associated with it, and was comparable or cheaper than credit card debt; and (2) violated the TILA by not providing consumers the required closed-end credit disclosures.  Further, the BCFP alleged that the defendants lured in vulnerable consumers such as senior citizens and military members.  The BCFP believed it had the authority to file the claim because the defendants were covered persons under the CFPA and the TILA, as the companies regularly extended consumer credit that was subject to a finance charge or was payable by a written agreement in more than four installments

Specifically, the BCFP alleged the defendants offered contracts where the consumers received lump sums ranging from $100 to at least $60,000, and were obligated to repay larger total amounts through a series of monthly payments, which were made when the consumers received their disability, pension or other payments.  The BCFP claimed the consumers made the payments over prescribed periods, typically on 48, 60, or 120 month terms.  Additionally, the defendants allegedly required the consumers to give authorization to the defendants to periodically debit the accounts in which the consumers deposited their pensions or other future income streams – income streams that are supposedly not assignable.  The BCFP alleged the defendants charged consumers a number of fees and that the transactions cost consumers amounts that were equivalent to rates of up to 183% or more.

The BCFP complaint can be found here.