CFPB Brings Action Against Online Lender for Deceiving Borrowers

The Consumer Financial Protection Bureau (CFPB) took action yesterday against an online lender, Integrity Advance, LLC, and its CEO, James R. Carnes, for deceiving consumers about the cost of short-term loans. The Bureau alleges that the company’s contracts did not disclose the costs consumers would pay under the default terms of the contracts. The Bureau also alleges that the company unfairly used remotely-created checks to debit consumers’ bank accounts, even after the consumer revoked authorization for automatic withdrawals.

Pursuant to the press release issued by the CFPB, the Bureau has filed an administrative lawsuit seeking redress for harmed consumers, as well as a civil money penalty and injunctive relief. The administrative action was initiated by a “Notice of Charges.” A Notice of Charges initiates proceedings in an administrative forum, and is similar to a complaint filed in federal court. Under this procedure, the case will be tried by an Administrative Law Judge from the Bureau’s Office of Administrative Adjudication, an independent adjudicatory office within the Bureau. The Administrative Law Judge will hold hearings and make a recommended decision regarding the charges, which may be appealed to the Director of the CFPB for a final decision.

The Notice of Charges has not yet been released to the public. The Bureau’s Rules of Practice for Adjudication Proceedings provide that the CFPB may publish the actual Notice of Charges ten days after the company is served. If allowed by the hearing officer, the charges will be available on the CFPB website after that date.

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