Perhaps getting a little lost among the news of Richard Cordray’s decision to leave the Consumer Financial Protection Bureau last week was agency announcing it had filed a lawsuit against Think Finance, a company that offers an online lending technology platform, for illegally collecting on loans that are void under state laws.
Many states have laws that govern the amount of interest that can be charged on a lending product and many others also have rules requiring lenders to be licensed in order to make loans in that particular state. In this case, the CFPB is charging Think Finance with providing a platform for lenders to gouge consumers by charging higher-than-allowed interest rates or by making loans when it did not have a proper license to do so.
Think Finance marketed and solicited small-dollar loans on behalf of a number lenders that are owned by Native American tribes, including marketing, advertising, hosting websites, routing customer calls, training customer service agents to handle customer calls, monitoring employees, providing and maintaining a loan servicing platform, providing and maintaining loan origination software, identifying third party collection agencies, and facilitating the sale of delinquent accounts.
Think Finance would identify individuals as possible lending targets by purchasing leads from credit reporting agencies. Think would then receive applications and make decisions about whether to fund the loan. The tribes would receive a small commission for the use of their names in promoting the loans.
When a consumer complained that a loan potentially violated state law, Think Finance would just close that individual’s account.
Loans originated in Arizona, Arkansas, Connecticut, Illinois, Indiana, Kentucky, Massachusetts, Minnesota,Montana, New Hampshire, New Mexico, New York, North Carolina, Ohio, and South Dakota are being claimed as void because of interest rate or licensing laws. Think Finance helped originated more than $35 million of loans in those states and collected on more than $56 million in principal and interest.
A copy of the complaint can be accessed here
