CFPB Sues Four Online Lenders for Illegal Debt Collecting

CFPB Sues Four Online Lenders for Illegal Debt Collecting

May 1, 2017         Written By John H. Oldshue

The Consumer Financial Protection Bureau has filed a lawsuit against four online lenders for illegal debt collection practices. The companies collected money for loans that had been voided due to state laws; the consumers no longer owed money.

The CFPB’s lawsuit targets Golden Valley Lending, Inc., Mountain Summit Financial, Inc., Silver Cloud Financial, Inc., and Majestic Lake Financial, Inc. These companies operate much like brick-and-mortar payday loan providers, but they process applications and disburse funding online. Loans range from $300 to $1,200, and they come with an interest rate of up to 950% per year.

Seventeen states throughout the country have banned or put limits on loans like this, and the aforementioned lenders violated those terms. They also did not have the licenses to lend money in all those states. Furthermore, the lenders did not disclose the annual percentage rate for their loans on their websites or in phone calls with representatives. They collected funds through direct transfers from their customers’ bank accounts, often without their information—they received a paper check payment and used that to create a direct transfer.

The CFPB aims to prevent unlawful debt collecting from occurring in the future, and are seeking financial compensation for those affected by the practices. They are also charging a penalty against the lenders, but the amount has not yet been disclosed.



The information contained within this article was accurate as of May 1, 2017. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


john-oldshue

About John H. Oldshue

John Oldshue is the creator of LowCards.com. He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for LowCards.com.
View all posts by John H. Oldshue
Featured Low Interest Card
Top Features : 1.25X miles on every purchase; no annual fee; bonus of 20,000 miles once $1,000 is spent in first 3 months
Featured Cash Back Card
Top Features : 1.5% cash back on all purchases; $150 bonus after spending $500 in first 3 months
Featured No Annual Fee Card
Top Features : Earn cash back TWICE. 1% when you buy plus 1% as you pay; 0% APR for 18 months on balance transfers
Featured Bad Credit Card
Top Features : Perfect credit not required; Reports to major credit bureaus
Featured Fair Credit Card
Top Features : No annual fee; access to higher credit line after making first 5 monthly payments on time
Featured Limited/No Credit
Top Features : No annual fee; reports to major credit bureaus; access to higher credit line after making first 5 monthly payments on time