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CFPB Enforcement Actions

The Consumer Financial Protection Bureau (CFPB), a federal agency created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, regulates the offering and provision of consumer financial products or services under the federal consumer financial laws, and has the authority to bring enforcement actions against financial service providers. While the CFPB accepts tips from whistleblowers, and applicable laws offer whistleblowers protection from retaliation, there is currently no provision for CFPB whistleblowers to receive financial rewards. However, conduct that is regulated by the CFPB may also give rise to a claim under a different whistleblower reward program.

Below are summaries of recent CFPB settlements or successful enforcement actions. If you believe you have information about fraud which could give rise to a claim under a whistleblower reward program, please contact us to speak with one of our experienced whistleblower attorneys.

June 30, 2016

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, 2016

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, 2016

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 26, 2016

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, 2016

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 25, 2016

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, 2016

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 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, 2016

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
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