Integrity Advance, LLC and James R. Carnes
On November 18, 2015, the Bureau filed a notice of charges against an online lender, Integrity Advance, LLC, and its CEO, James R. Carnes. The Bureau alleges that they deceived consumers about the cost of short-term loans and 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 consumers revoked authorization for automatic withdrawals. The Bureau is seeking injunctive relief, restitution, and the imposition of a civil money penalty. On September 27, 2016, the Administrative Law Judge (ALJ) issued a Recommended Decision finding liability and recommending injunctive and monetary relief. The Recommended Decision was appealed to the Director, but further activity on that appeal was held in abeyance pending a decision in PHH Corp. v. CFPB, No. 15-1177 (D.C. Cir.), and, subsequently, pending a decision in Lucia v. SEC, No. 17-0130 (S. Ct.). Subsequent to the Supreme Court’s ruling in Lucia that suggested that the ALJ that presided over the proceedings in this case may have been improperly appointed, the Director remanded the case for a new hearing and recommended decision by the Bureau’s ALJ. On March 26, 2020, Respondents moved to amend their answer, to reopen the record, and to dismiss the notice of charges. The ALJ denied these motions on April 24, 2020. In response to cross motions for summary disposition, on August 4, 2020, the ALJ issued a Recommended Decision finding in the Bureau’s favor on all counts. Respondents noticed an appeal to the Director and filed their opening appeal brief on September 3, 2020.
On January 11, 2021, the Director affirmed and reversed in part the Recommended Decision. She affirmed the ALJ’s conclusion that Integrity Advance violated TILA and EFTA and that both respondents violated the CFPA. With respect to the appropriate remedy, she concluded that Integrity Advance and James Carnes were jointly and severally liable for more than $38 million in restitution and imposed a $7.5 million civil money penalty against Integrity Advance and $5 million penalty against Carnes. The Director did not order restitution for conduct that pre-dated July 21, 2011, which is the Bureau’s designated transfer date. On September 15, 2022, the Tenth Circuit affirmed the Director’s order.