CFPB Cuts Cordray-Suggested Payday Lender Penalty in Half
On June 13, 2018, the CFPB imposed a $5 million consent order on a large payday lender for mishandling credit data and instituting improper debt collection practices, contravening a Cordray-era suggestion that the Bureau levy an $11 million penalty in the same matter. In doing so, the Bureau and its Acting Director Mick Mulvaney continued their trend of rejecting policies and dropping cases that began during former Director Richard Cordray’s tenure.
The payday lender allegedly pressed borrowers to buy personal insurance that was bundled into loans, routinely charged unreasonably high interest rates on short-term loans, and sent debt collection agents to threaten and/or assault more than 1.3 million customers at home and at work. Additionally, the lender delivered millions of faulty credit reports to credit bureaus.
To make amends for these affronts, former Director Cordray suggested that the lender pay $11 million—$3 million as a penalty for the debt collection and credit reporting abuses and $8 million to compensate consumers who felt obliged to purchase insurance. However, under the June 13th consent order, the lender must only pay $5 million to the government: no direct payment to the consumers is required. In addition, the lender promised to keep accurate credit reporting records.
The consent order is accessible here.
