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The Consumer Financial Protection Bureau (CFPB) yesterday took action against GreenSky, LLC for enabling contractors and other merchants to take out loans on behalf of thousands of consumers who did not request or authorize them, according to a press release. The CFPB issued a consent order against GreenSky requiring the company to refund or cancel up to $9 million in loans for customers harmed by its illegal conduct, pay a $2.5 million civil penalty, and implement new procedures to prevent future fraudulent loans. “GreenSky’s careless business and customer service practices enabled its merchants to take advantage of vulnerable consumers who needed financial help to repair their homes and to pay for other critical retail services by setting up loans without consumers’ consent,” said CFPB Acting Director Dave Uejio. GreenSky, a non-bank institution headquartered in Atlanta, used merchants, primarily those providing home improvements, to promote and offer financing to customers before making on-the-spot lending decisions based on criteria provided by its partner banks. Proceeds from GreenSky’s loans, ranging from a few thousand to tens of thousands of dollars, bypass consumers and are disbursed directly to merchants following the merchants’ application for payment. Some consumers complained that they never applied for a loan or even heard of GreenSky before receiving billing statements, collection letters, and calls from the company.

Congress yesterday overturned a set of regulations enacted in the final days of the Trump administration that effectively allowed payday lenders to avoid state laws capping interest rates, the Associated Press reported. The House voted 218-208 to overturn the Office of the Comptroller of the Currency’s payday lending regulations, with one Republican voting with Democrats. Yesterday's vote to overturn the OCC’s “true lender rules” marked the first time Democrats in Congress successfully overturned regulations using the Congressional Review Act. The act was enacted in the mid 1990s and gives Congress the authority to overrule federal agency rules and regulations with a simple majority vote in the House and Senate. Its powers are limited to a certain period after an agency finalizes its regulations, usually around 60 legislative days. The Senate had voted to overturn the OCC rules on May 11, in a vote of 52-47. The bill now goes to President Joe Biden, who is expected to sign it.

The Consumer Financial Protection Bureau (CFPB) issued a consent order today against 3rd Generation, Inc., doing business as California Auto Finance (California Auto) for illegally charging interest for late payment on its Loss Damage Waiver (LDW) product without its customers’ knowledge, according to a press release. The CFPB’s order requires California Auto to refund or credit customers harmed by the conduct, furnish corrected information to credit reporting agencies, and pay a civil penalty and also prohibits the company from charging interest on late payments without disclosing costs. California Auto is an auto-loan finance company serving consumers in California. California Auto services subprime auto loans that were originated by car dealers and later assigned to California Auto. California Auto required its customers to agree that if they had insufficient insurance coverage for their automobiles, they would add “loss-damage-waiver” coverage to their accounts. LDW is a product that, for a monthly fee, covers cancellation of the customer’s debt in the event of a total vehicle loss or the cost of a repair if the vehicle was not a total loss.

The Consumer Financial Protection Bureau (CFPB) requested yesterday that a federal district court enter a final judgment and order that, if entered by the court, would require DMB Financial, LLC to pay consumers at least $5.4 million for charging unlawful fees and failing to provide required disclosures to its customers, and a civil penalty, according to a press release. The CFPB alleges that DMB’s actions violated the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act (CFPA). “DMB Financial preyed on consumers who were struggling financially, charging millions of dollars in illegal upfront fees and hiding the true cost of its services,” said CFPB Acting Director Dave Uejio. “Charging upfront fees for debt settlement is a violation of federal law, and the CFPB will continue to act decisively when we see companies taking advantage of consumers in this way.” DMB Financial is a Massachusetts-based debt-settlement company that operates in at least 24 states. DMB offers and provides services to settle or renegotiate unsecured debt on behalf of consumers. In December 2020 the CFPB filed a lawsuit against DMB Financial in federal district court in Massachusetts alleging that the company had charged unlawful upfront frees before it performed its promised services, and before consumers began making payments under any debt settlement.

Wells Fargo and Co. is facing a new probe from the U.S. consumer watchdog over how it disclosed and assessed monthly fees on certain consumer bank accounts in 2016, the bank disclosed in a regulatory filing yesterday, Reuters reported. The Consumer Financial Protection Bureau (CFPB) is “investigating certain of the Company’s past disclosures to customers regarding the minimum qualifying debit card usage required for customers to receive a waiver of monthly service fees on certain consumer deposit accounts,” the bank said. The probe is the latest regulatory hurdle for the San Francisco-based lender, which has been mired in scandal related to unauthorized product sales since it revealed here in 2016 that it had opened potentially millions of depository and credit card accounts without clients' permission. Since then, issues have cropped up in each of Wells Fargo’s primary business segments, including with respect to mortgages, insurance and identity theft protection products. The CFPB had already been investigating whether Wells Fargo had previously harmed customers with its practice of freezing and closing accounts when it suspected fraudulent activity. In its latest filing, Wells Fargo reported that losses from all potential pending litigation related to its sales scandals as of March 31 could be as high as $2.6 billion, up from $2.4 billion at the end of last year.

The Consumer Financial Protection Bureau (CFPB) and New York Attorney General Letitia James yesterday filed a complaint in federal court to seize a $1.6 million home, the ownership of which the complaint alleges was fraudulently transferred by the operator of a massive and now-defunct debt-collection scheme. Douglas MacKinnon transferred ownership of his home to his wife and daughter for the sum of $1 shortly after learning of a federal and state investigation into his companies Northern Resolution Group LLC and Enhanced Acquisitions LLC. The complaint asks the court to declare the transfer void and order the seizure and sale of the property to partially repay MacKinnon’s outstanding debt to the federal and state governments for his illegal conduct. In 2019, the CFPB and New York Attorney General reached a settlement with Douglas MacKinnon, Northern Resolution Group, LLC, Enhanced Acquisitions, LLC, Delray Capital, LLC, and Mark Gray. The CFPB had sued MacKinnon and Gray and their companies for harassing, threatening, and deceiving millions of consumers across the nation into paying inflated debts or amounts they did not owe. The companies routinely added $200 to each debt they purchased and attempted to collect, used spoofing technology to make it appear as though they were calling from government agencies, and sent threatening messages to consumers to frighten them into paying. MacKinnon and his companies were permanently banned from the debt collection industry and ordered to pay $60 million in consumer redress and penalties. Despite the court’s order, MacKinnon has not made any payments toward satisfying the judgment against him, and neither he nor his family members have cooperated in the Bureau’s and New York’s efforts to obtain relevant financial information.

The Consumer Financial Protection Bureau (CFPB) took action yesterday against an online debt-settlement company for taking advantage of consumers, failing to disclose its relationship to certain creditors, and steering consumers into high-cost loans offered by affiliated lenders, according to a CFPB press release. The CFPB filed a complaint in federal district court alleging that SettleIt, Inc. engaged in abusive acts or practices under the Consumer Financial Protection Act of 2010 (CFPA) and violated the Telemarketing Sales Rule (TSR). The Bureau and SettleIt filed a proposed order that, if entered by the court, would require SettleIt to return at least $646,000 in fees to consumers, pay a $750,000 civil penalty, and stop settling debts for creditors with which it shares an ownership interest.