The Consumer Financial Protection Bureau (CFPB) has sued four online lenders for reportedly deceiving consumers by collecting debt they were not owed legally. The four lenders sued include Silver Cloud Financial, Golden Valley Lending, Majestic Lake Financial and Mountain Summit Financial. The lawsuit was filed in federal court.
The lawsuit claims that the lenders were not legally allowed to collect on the debts in which they did because the loans were void. The loans were void due to state laws that govern the licensing of lenders and interest rate caps.
According to the lawsuit filed by the CFPB, the lenders made deceptive demands to the borrowers and then illegally took money from their bank accounts for debt that the borrowers didn’t even legally owe. The lawsuit claims that the lenders violated both the Dodd-Frank Act and the Truth in Lending Act.
An investigation by CFPB found that the loans from all four lenders violated licensing requirements, caps for interest rates, or both in 17 states, including New Hampshire. The lawsuit states that the lenders went after the debtors even though the loans were void in whole or in part and therefore payments could not legally be collected.
Some loans were voided because the lenders violated usury laws for interest rates due to the rates being too high. In addition to this, the four lending companies did not obtain licenses to lend or collect in some of the 17 states. Failing to obtain said licenses also helped void some of the loans.
The CFPB alleges in the lawsuit that the four lenders either illegally withdrew funds from debtors’ accounts, sent letters or made phone calls to tell debtors they owed money on the loans and demanded payment. The lawsuit also claims that the lenders did not reveal the true cost of credit.
If you are in debt and don’t know where to turn, an experienced bankruptcy attorney in Nashua, New Hampshire, can answer all of your questions regarding debt relief.
Source: Financial Regulation News, “CFPB sues online lenders it alleges collected debt they were not owed,” May 02, 2017