The Consumer Financial Protection Bureau yesterday fined Enova, an online lender $15 million for violating an earlier consent order and engaging in “widespread” illegal conduct, but also added a new wrinkle to its penalty — requiring the company to couple executive compensation to the company’s compliance with consumer protection laws and banning it from offering certain consumer loans.
What it Did: Enova was previously fined $3.2 million back in 2019. When it went back to see how the company was complying with that enforcement action, the CFPB found that the company was:
- Withdrawing funds from borrowers’ accounts without their consent
- Canceling loan extensions it had granted
- Not informing borrowers that if they made an interim partial payment that their loan extension would be canceled
- Misrepresenting the due date for loan paments
- Failing to provide consumers with copies of signed authorizations
What Happens Next: Along with paying the fine, Enova is required to:
- For the next seven years, stop offering closed-end consumer loans that must be substantially repaid within seven days
- Obtain consumers’ express informed consent before initiating attempts to debit funds from their accounts
- Honor loan extensions granted to consumers
- Reform its executive compensation practices
The Last Word: “Enova decided to keep flouting the law after it was caught taking advantage of its customers, and violated a law enforcement order,” said CFPB Director Rohit Chopra. “Today’s action imposes a $15 million penalty, bans the company from certain lines of business, and reforms executive compensation.”
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