CFPB Enforcement Actions

CFPB
September 2016

September 8 – The CFPB fined Wells Fargo Bank, N.A. $100 million for the widespread illegal practice of secretly opening unauthorized deposit and credit card accounts.  Wells Fargo employees opened more than 200 million accounts that may not have been authorized.  In addition to the $100 million CFPB penalty, the largest the CFPB has ever imposed, Well Fargo will pay full restitution to the victims and two other penalties totaling $85 million.  CFPB

August 2016

August 25 – The CFPB ordered First National Bank of Omaha to provide $27.75 million in relief to roughly 257,000 consumers harmed by illegal practices with credit card add-on products. The bank used deceptive marketing to lure consumers into debt cancellation add-on products and charged consumers for credit monitoring services they did not receive. First National Bank of Omaha will also pay a $4.5 million civil money penalty to the CFPB.  CFPB

August 22 – The CFPB sued Wells Fargo Bank for illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers.  The consent order requires Wells Fargo to pay at least $410,000 to compensate consumers for illegal late fees, improve its consumer billing and student loan payment processing practices, and pay a $3.6 million civil penalty to the CFPB.  CFPB

July 2016

July 14 — The CFPB ordered Santander Bank, N.A. to pay a $10 million fine for using a telemarketing vendor to deceptively market their overdraft service and sign certain bank customers up for the service without their consent.  CFPB

June 2016

June 30 — The CFPB’s supervisory actions from January to April 2016 uncovered illegal activities in auto finance and payments that led to approximately $24.5 million in restitution to more than 257,000 consumers.   CFPB

June 29 — The CFPB and DOJ took joint action against BancorpSouth Bank for discriminatory mortgage lending practices that harmed African Americans and other minorities.  The complaint alleges BancorpSouth engaged in numerous discriminatory practices, including illegally redlining in Memphis; denying certain African Americans mortgage loans more often than similarly situated non-Hispanic white applicants; charging African-American customers for certain mortgage loans more than non-Hispanic white borrowers with similar loan qualifications; and implementing an explicitly discriminatory loan denial policy. The proposed consent order seeks $4 million in direct loan subsidies in minority neighborhoods in Memphis, at least $800,000 for community programs, advertising, outreach, and credit repair, $2.78 million to African-American consumers who were unlawfully denied or overcharged for loans, and a $3 million penalty.  CFPB

June 6 — The CFPB took action against payment processer Intercept Corporation and two of its executives, Bryan Smith and Craig Dresser, for allegedly enabling unauthorized and other illegal withdrawals from consumer accounts by their clients.  The complaint alleges Intercept, Smith, and Dresser processed payments for clients without adequately investigating, monitoring, or responding to red flags that indicated some clients were breaking the law or deceiving customers.  CFPB

May 2016

May 26 — The CFPB filed a lawsuit against former Wells Fargo employee David Eghbali for orchestrating an illegal mortgage fee-shifting scheme.  Eghbali had an agreement with escrow company New Millennium Escrow, Inc. to reduce the escrow fees charged to his price-conscious customers and make up for the loss by overcharging other customers.  In return, Eghbali referred nearly all of his clients to New Millennium.  The scheme enabled Eghbali to close more loans and increase his commissions.  CFPB

May 11 — The CFPB took action against All American Check Cashing, Inc., which offers check cashing and payday loans, and its owner Michael Gray, for allegedly tricking and trapping consumers.  The complaint alleges that All American tried to keep consumers from learning how much they would be charged to cash a check, used deceptive tactics to stop consumers from backing out of transactions, made deceptive statements about the benefits of its high-cost payday loans, and also failed to provide refunds after consumers made overpayments on their loans.  CFPB

April 2016

April 25 — The CFPB ordered debt collection law firm Pressler & Pressler, LLP, principal partners Sheldon H. Pressler and Gerard J. Felt, and New Century Financial Services, Inc., a debt buyer, to stop churning out unfair and deceptive debt collection lawsuits based on flimsy or nonexistent evidence.  The orders also require the firm and the named partners to pay $1 million, and New Century to pay $1.5 million to the Bureau’s Civil Penalty Fund.  CFPB

April 21 — The CFPB filed a lawsuit against Dmitry Fomichev and Davit Gasparyan, co-founders of T3Leads, a lead aggregator that buys consumer information – called leads – from websites that market payday and installment loans. The complaint alleges their company did not vet or monitor its lead buyers, exploited consumers’ lack of understanding of the risks, costs, and conditions of the loans applied for, and put consumer information at risk of being trafficked for illegal purposes.  CFPB

March 2016

March 30, 2016 – The CFPB issued an order against student debt relief company, Student Aid Institute, Inc., and its chief executive officer, Steven Lamont, for, among other things, deceiving customers about how much they would save by using their services and misleading customers into believing that fees were required to participate in free federal student loan programs.  The company reaped millions of dollars in advance fees from thousands of customers as a result of these and other deceptions.  The order requires Student Aid Institute and Lamont to pay a penalty of $50,000, shut down the company’s debt relief services, cancel all contracts with customers and stop charging them for services. The company and Lamont are also permanently barred from the debt relief industry. CFPB

March 18, 2016 – A California district court ordered debt relief company Morgan Drexen, Inc., to pay $132,882,488 in restitution and a $40 million civil penalty for charging illegal upfront fees and deceiving consumers.  The order follows a preliminary injunction prohibiting the company from collecting any more money from customers and a default judgment entered against the company for misleading the court and “act[ing] willfully and in bad faith by falsifying evidence.”  The court’s findings regarding Morgan Drexen’s bad faith were based, in part, on testimony from a whistleblower who exposed the company’s conduct.   CFPB

March 15 – The CFPB requested a California district court to enter a final judgment and order banning Student Loan Processing.US and its sole owner, James Krause, from any future involvement in debt relief and student loan services.  The proposed order also requires the company to shut down all operations within 45 days of the judgment and to pay $8.2 million in refunds to thousands of harmed consumers – although most of that payment will be suspended due to the defendant’s inability to pay.  The CFPB’s lawsuit alleged that Student Loan Processing.US charged consumers illegal upfront enrollment fees before providing any services, deceived customers about the costs of their services, and falsely represented an affiliation with the DOE. CFPB

March 8 – The CFPB’s supervisory examinations of banks and nonbanks in the last months of 2015  resulted in the remediation of $14.3 million to approximately 228,000 consumers.  Under the Dodd-Frank Act, the CFPB supervises banks and credit unions with more than $10 billion in assets and certain nonbanks, including, among others, mortgage companies, private student loan lenders, and payday lenders.  In their exams, the Bureau found violations in the student loan market, including illegal automatic defaults by student loan servicers and illegal garnishment threats by debt collectors performing services for the DOE. Examiners also found instances of international money transfer companies violating the CFPB’s new remittance rule, banks providing inaccurate information to credit reporting companies about customer checking accounts, and debt collectors illegally contacting consumers. CFPB

March 2 – The CFPB ordered Dwolla, an online payment platform, to pay a $100,000 penalty for deceiving consumers about its data security practices and the safety of its online payment system.  The bureau also ordered Dwolla to fix its security practices.  The company, which collected and stored sensitive personal information for more than 650,000 users, failed to employ reasonable and appropriate measures to protect data from unauthorized access and failed to encrypt sensitive personal information, despite representations to the contrary.  CFPB

 

February 2016

February 23 – The CFPB filed two orders against Citibank relating to the bank’s illegal debt sales and debt collection practices.  The bureau ordered Citibank to provide nearly $5 million in consumer relief and pay a $3 million penalty for selling credit card debt with inflated interest rates and failing to forward consumer payments promptly to debt buyers.  Separately, the CFPB ordered Citibank to comply with a court order requiring the bank to refund $11 million to consumers and forgo collecting an additional $34 million for filing altered affidavits in debt collection litigations.   CFPB

February 2 — Toyota Motor Credit will pay up to $21.9 million in restitution to thousands of African-American and Asian and Pacific Islander borrowers who paid higher interest rates than white borrowers for their auto loans, without regard to their creditworthiness, as a result of the company’s past practices. Toyota Motor Credit will also change its pricing and compensation system to substantially reduce dealer discretion and accompanying financial incentives to mark up interest rates. The action is a result of a joint CFPB and DOJ investigation that concluded that Toyota Motor Credit’s discretionary pricing and compensation policies resulted in discriminatory outcomes. CFPB

January 2016

January 21 — The CFPB required Herbies Auto Sales to pay $800,000 for violating the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act by unlawfully advertising a misleadingly low APR without disclosing hidden charges and requirements. CFPB

December 2015

December 28 — The CFPB filed a proposed consent order in the Northern District of Georgia that would require Frederick J. Hanna & Associates and its principal partners to pay $3.1 million to the Bureau’s Civil Penalty Fund and bar them from illegal debt-collection practices. The CFPB’s complaint charges the firm with intimidating consumers with deceptive court filings and introducing faulty or unsubstantiated evidence in court. CFPB

December 17 — The CFPB took separate actions against T3Leads and Eric V. Sancho, who operated Lead Publisher, for reselling sensitive personal data to lenders and debt collectors, allegedly exposing millions of consumers to harassment and deceit. CFPB

December 17 — The CFPB ordered CarHop, one of the country’s biggest “buy-here, pay-here” auto dealers, and its affiliated financing company, Universal Acceptance Corporation, to cease their illegal activities and pay a $6,465,000 civil penalty for providing damaging, inaccurate consumer information to credit reporting companies. CFPB

December 16 — The CFPB ordered EZCORP, Inc., a small-dollar lender, to refund $7.5 million to 93,000 consumers, pay $3 million in penalties, and stop collection of remaining payday and installment loan debts owed by roughly 130,000 consumers for illegal debt collection practices. The CFPB found that EZCORP collected debts from consumers through unlawful in-person collection visits at their homes or workplaces, risked exposing consumers’ debts to third parties, falsely threatened consumers with litigation for non-payment of debts, and unfairly made multiple electronic withdrawal attempts from consumer accounts, causing mounting bank fees. CFPB

December 7 — The CFPB filed a proposed consent order that would require EOS CCA, a Massachusetts debt collection firm, to overhaul its debt collection practices, refund at least $743,000 to consumers, and pay a $1.85 million civil money penalty for (1) reporting and collecting on old cellphone debt that consumers disputed and EOS CCA did not verify and (2) providing inaccurate information to credit reporting companies about the debt and failing to correct reported information that it had determined was inaccurate. CFPB

December 3 — The CFPB ordered a nationwide credit reporting company, Clarity Services, Inc., to pay an $8 million penalty, halt its illegal practices, and improve the way it investigates consumer disputes and obtains, sells, and resells consumer credit reports. The company had illegally obtained consumer credit reports and failed to appropriately investigate consumer disputes. CFPB

November 2015

November 18 — The CFPB filed an administrative lawsuit against an online lender, Integrity Advance, LLC, and its CEO, James R. Carnes, for deceiving consumers about the cost of short-term loans. The suit seeks redress for harmed customers, injunctive relief, and a civil monetary penalty. CFPB

November 3 — CFPB supervisory actions between May 2015 and August 2015 resulted in $107 million in relief to more than 238,000 consumers for violations in the student loan servicing, mortgage origination and servicing, consumer reporting, and debt collection markets. CFPB

October 2015

October 29 — The CFPB ordered General Information Services and its affiliate, e-Background-checks.com, Inc., two of the largest employment background screening report providers, to pay $10.5 million in relief to harmed consumers, and pay a $2.5 million civil penalty, for failing to take basic steps to assure the information they reported about job applicants was accurate. The serious inaccuracies reported potentially affected consumers’ eligibility for employment and caused reputational harm. CFPB