CFPB Reaches Settlement with Payday Lenders

On February 4, 2019, the U.S. District Court for the Southern District of New York signed a consent order submitted by the CFPB, approving the CFPB’s settlement with several Canadian and Maltese payday lenders that allegedly violated the Consumer Financial Protection Act and Credit Practices Rule, when, without obtaining proper state licensure, they marketed and made payday loans to United States consumers and exceeded state usury laws.

As background, the defendants are various Canadian and Maltese companies and individual controlling principal officers.  The corporate defendants operated under an umbrella financial enterprise, and offered short-term and high-cost payday loans over the internet to individuals in all fifty United States. In the consent order, the defendants admitted that they failed to obtain necessary state licenses; issued and collected on loans with terms that exceeded state usury laws; and falsely represented to consumers that they were obligated to repay loans, when the loans were void for violating state licensing and usury laws.  The payday lenders also falsely represented that the loans were only subject to Maltese laws, and conditioned some loan agreements upon wage assignment clauses that did not state that the wage assignment clauses were revocable.

As a result of the violations, the defendants agreed to permanently refrain from advertising, marketing, originating, or servicing consumer loans to any individuals in the United States; from collecting any existing debt from loans obtained from United States customers, including any effort to assign, sell or transfer such loans; and from disclosing, using, or otherwise benefiting from any consumer information obtained from any customer residing in the United States.

The case is Consumer Financial Protection Bureau v. NDG Financial Corp., et al., Case No. 15-cv-5211 (S.D.N.Y. filed July 31, 2015).