CFPB Cracks Down On Another Online Lender

The Consumer Financial Protection Bureau has taken action against Integrity Advance, an online lender, and James R. Carnes, the chief executive officer of the firm. The bureau has charged that Integrity Advance deceived its consumers about the cost of short-term loans, especially in the event of default.

The CFPB said in a press release that the company “unfairly used remotely created checks to debit consumers’ bank accounts even after the consumers revoked authorization for automatic withdrawals,” an allowance that was hidden within contract provisions. The agency has filed suit seeking redress for those consumers harmed, in addition to seeking an injunction and a civil monetary penalty.

The Delaware-based lender originated and serviced loans that were offered to borrowers nationwide, in amounts ranging from $100 to $1,000. The borrowers applied for the loans by offering information up to a lead generator website.

If in default, alleged the bureau, loans would roll over four times, with new charges and accruals tied to each rollover, before payments were applied in order to reduce principal amounts. But costs to the consumers in the disclosures were calculated and presented based on the assumption that the loans would not roll over and would instead be paid in full upon the first payment. Allegedly, Integrity Advance never informed consumers of these caveats, said the CFPB. In the end, the finance charges could be double the actual amount borrowed.

[bctt tweet=”Finance charges could be double the actual amount borrowed.”]

In its release on Wednesday (Nov. 18), the CFPB alleged that Integrity Advance violated the Truth in Lending Act and the Electronic Fund Transfer Act and that both the firm and Carnes, through these actions and additional ones, violated the Dodd-Frank Wall Street Reform and Consumer Protection Act.