CFPB Takes Action Against Online Lender Integrity Advance, LLC

On November 18, 2015, the Consumer Financial Protection Bureau (“CFPB”) announced that it had initiated administrative proceedings against online lender Integrity Advance, LLC, and its CEO, for allegedly misleading consumers about the cost of loans short term.

From May 2008 to December 2012, Integrity Advance created and managed short-term online loans ranging from $ 100 to $ 1,000. The CFPB alleges that Integrity Advance engaged in unfair and deceptive practices relating to the granting and servicing of loans, in violation of the Truth in Loans Act, the Electronic Funds Transfer Act, the Wall Street’s Dodd-Frank reform and consumer protection law.

More specifically, CFPB alleges that Integrity Advance illegally:

  • Hid the full cost of consumer loans by only disclosing the cost of repayment on a single payment basis, although in the event of default the loans would be renewed up to four times resulting in fees and costs additional, which were not disclosed;
  • Required consumers to agree to repay their loans through pre-authorized payments by the Automated Clearing House (“ACH”); and
  • Hid a provision in loan agreements that allowed the company to use remotely created checks if a consumer revoked authorization for ACH payments.

CFPB’s notice of indictment that was filed against Integrity Advance was initiated in an administrative forum and will be tried by an administrative judge. The notice of charge is not yet publicly available, but it can be posted on the CFPB website ten days after service on Integrity Advance, if the hearing officer allows it.

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