On November 18, 2015, the CFPB announced that it had initiated an enforcement action against an online finance company. The company offered personal loans in amounts ranging from $100 to $1,000, which consumers applied for using an online application on the company’s website. When consumers applied for the loans, the company made a series of disclosures regarding finance charges and payment terms. According to the CFPB, the company failed to disclose the full amount and frequency of the finance charges, in violation of the Truth in Lending Act. The CFPB also alleged that the company required consumers to agree to recurring Automatic Clearing House (ACH) payments before disbursing the loan, in violation of the Electronic Funds Transfer Act (EFTA). Under the EFTA, lenders cannot condition a loan disbursement on consumers’ agreement to make ACH payments. Finally, the CFPB alleged the company used “remotely created checks” to debit consumers accounts if they canceled the automatic ACH payments. The company allegedly failed to properly disclose the loan term permitting the company to use the “remote check” method for debiting payments. The CFPB initiated the enforcement action by serving the company with a “Notice of Charges.” The case will be handled by an Administrative Law Judge within the CFPB, who will hold hearings and issue a decision regarding the charges. The Notice of Charges against the company is not publicly available at this time.
