Online Lenders Sued for Collecting on Debts that Consumers Did Not Owe
The companies are accused of deceiving consumers about debt that they legally did not owe
The Consumer Financial Protection Bureau (CFPB) is suing four online lenders for collecting on debts that consumers legally did not owe.
Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial, and Majestic Lake Financial are accused of deceiving consumers by collecting debts that they were not legally owed.
The CFPB claims that the debt collection was illegal because the loans were void under state laws that governed interest rate caps or lender licensing. According to the agency, the lenders made deceptive demands on the victims and took money illegally from their bank accounts, money that they did not legally owe.
"We are suing four online lenders for collecting on debts that consumers did not legally owe," said CFPB Director Richard Cordray. "We allege that these companies made deceptive demands and illegally took money from people's bank accounts. We are seeking to stop these violations and get relief for consumers."
The agency's investigation revealed that the high-cost loans made by the lenders were in violation of licensing requirements, interest-rate caps, or both, making the loans completely or partly void in at least 17 states: Arizona, Arkansas, Colorado, Connecticut, Illinois, Indiana, Kentucky, Massachusetts, Minnesota, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, and South Dakota.
The CFPB hopes to stop these unlawful practices, gain relief for the victims, and impose a penalty on the lenders.