Today, a federal district court entered an order that returns money to the pockets of American consumers and stops a company from violating laws. The case also represents a landmark for us: it’s the first time we’ve joined with state attorneys general in filing suit to enforce consumer-financial-protection laws. The order is a win for the company’s customers.
Payday Loan Debt Solution, Inc. (PLDS) is a debt-relief service provider that purports to help consumers settle their payday-loan debts. A Bureau investigation found evidence that PLDS routinely charged consumers a fee in advance of actually settling their debts. This practice violates the Federal Trade Commission’s Telemarketing Sales Rule, the Dodd-Frank Act, and the laws of various states.
We brought this lawsuit to stop PLDS’s unlawful practice and to obtain compensation for consumers who were unlawfully charged advance fees. Upon learning of the Bureau’s investigation, PLDS immediately ceased its unlawful conduct and has cooperated with the Bureau’s investigation. Today, the court enters an order that resolves this matter. The order:
- Finds that PLDS and its president, Sanjeet Parvani, engaged in practices that violated the federal consumer financial protection laws and the laws of several states;
- Enjoins PLDS and Parvani from engaging in the unlawful conduct in the future;
- Requires PLDS to pay $100,000, amounting to full restitution for consumers who were charged advance fees, but who received no debt-settlement services from PLDS by the time their accounts were closed;
- Requires PLDS to pay to the Bureau $5,000 in a civil money penalty; and
- Requires PLDS and Parvani to cooperate with the Bureau in any future investigations of other entities related to the transactions that are the subject of the complaint.
This was our first joint enforcement action with state attorneys general. As we sought to enforce federal consumer protection laws, the states of Hawaii, New Mexico, North Carolina, North Dakota, and Wisconsin all joined our investigation and lawsuit to enforce their own laws. Today’s order grants complete injunctive relief to consumers under the laws of these states, as well as restitution to harmed consumers there and elsewhere.
The court order includes instructions to pay a civil monetary penalty. PLDS and Parvani immediately ceased the unlawful conduct and cooperated with our investigation, which helped limit the size of the civil penalty.
This matter affects only a single debt-relief service provider, but it is part of our comprehensive effort to police the debt-relief industry. Our work focuses not only on debt-relief service providers, but also on their partners, including those who facilitate their unlawful conduct and who may also run afoul of the federal consumer financial protection laws.
Public input is tremendously important to our work at the CFPB. At our January field hearing in Birmingham, we had the opportunity to gather information directly from Alabamans about their experiences with payday loans.
We’d also like to hear from you. The CFPB is inviting public comments for the record. Please take this opportunity to share your thoughts and insights.
Payday loans are typically marketed as a way to get quick cash when you need it. They generally have three features: the loans are for small dollar amounts; borrowers must repay the loans quickly; and the loans require that a borrower give lenders access to repayment through a claim on the borrower’s deposit account.
We heard and learned a lot at the Birmingham forum, and we know that there are many others around the country who may wish to add to the dialogue. Please tell us your experiences!
You can also watch Director Cordray’s opening remarks from Birmingham below, or read the transcript of the entire event, including what we heard from the public.
Yesterday, Director Cordray kicked off our field hearing on payday lending in Birmingham, Ala., by explaining why he was there and what the Bureau wants to learn from consumers about payday loans. (more…)
Today, the Consumer Financial Protection Bureau traveled to Birmingham, Ala., for our first field hearing. We gathered to discuss and collect information on payday lending. The payday lending market is a multi-billion dollar industry in the United States, and Alabama has one of the largest concentrations of payday lenders in the country. (more…)