CFPB drops yet another case against a predatory payday lender

Inside Subprime: April 27, 2018

By Aubrey Sitler

Since the start of 2018, the Consumer Financial Protection Bureau (CFPB) has dropped numerous cases it had pending against predatory and fraudulent payday lenders.

The most recent of these dropped sanctions was against NDG Financial Corp, a 21-business agency accused of running “a cross-border online payday lending scheme” between Canada, Malta, and the U.S. News of the CFPB’s decision not to pursue charges against NDF Financial Corp appeared in the Bureau’s April 2018 semi-annual report to Congress, but they offered no explanation for this change in the report, and Vox reports that they refused to answer questions about six defendants who were dropped back in February.

This is the first semi-annual report released under Trump-appointed CFPB Director Mick Mulvaney, who assumed the office in November. During his tenure as a Republican Congressman from South Carolina’s 5th District, Mulvaney notoriously referred to the Bureau he now leads as a “joke” and, as reported by CNN, “[he] even endorsed abolishing the CFPB, casting it as a renegade regulator that hurts Americans by crippling access to credit.”

Despite his Bureau’s intended role as an advocate, protector, and watchdog for consumers across the U.S., Mulvaney made clear in a statement to members of Congress, which accompanied the semi-annual report on April 10, that the CFPB has changed its strategic priorities moving forward: “The Bureau’s new strategic priorities are to recognize free markets and consumer choice and to take a prudent, consistent, and humble approach to enforcing the law.  This reflects my understanding that consumers and creditors alike gain from mutual exchange, provided that promises are kept, terms are clearly disclosed, and property rights are protected.”

He also described how the CFPBwill play a more passive role under his watch stating: “[The] Bureau practice of ‘regulation by enforcement’ has ceased.” In this same statement, he also outlined the new strategic approach that the CFPB will take to its work. He noted that the bureau will be “judicious in the use of [its] power” to exercise the rulemaking authority with which it is endowed.

NDG Financial Corp and its affiliates are not the only predatory lending companies that have benefitted from Mulvaney’s tenure in his post.

In January, the CFPB voluntarily dismissed a case against four California payday lenders (Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial Inc.,) accused of collecting millions of dollars directly from consumers’ bank accounts on debts that they did not legally owe due to those lenders’ use of fees and interest rates that exceeded the state laws in which they were operating.

Reuters also reported in March that Mulvaney had dropped a suit against a Kansas payday loan collector and that he was contemplating dropping as many as three others.

While these newly instated CFPB strategies and approaches are hardly surprising, they seem to value the rights of corporations to profit from predatory and abusive practices more highly than the rights of low-income families to solve their economic crises without entering into debt traps. A CFPB that is no longer interested in enforcing the regulations it is charged with enforcing will likely result in companies like NDG Financial Corp swindling consumers out of millions of dollars, as they have reportedly been doing for years.

Ethical questions related to how the Trump Administration may be benefitting from certain interactions with stakeholders in the payday lending industry may also be on the horizon. The payday lending industry has donated a reported $62,950 to Mulvaney’s campaigns for Congress in the past, and the Community Financial Services Association of America announced recently that it will be convening payday lending executives at Trump National Doral Golf Club in Florida for its annual conference.

To learn more about payday lending in Kansas and California, check out these related pages and articles from OppLoans: