Scammer Fined $1 for Predatory Lending Practice Targeting Veterans
Inside Subprime: Jan 30, 2019
By Ben Moore
Kathy Kraninger, the director of the Consumer Financial Protection Bureau, has fined Mark Corbett just $1 after he was convicted of using deceptive practices to sell US veterans high-interest loans. The fine comes after the Bureau’s late 2018 decision to no longer monitor compliance with the Military Lending Act, a bill meant to protect American veterans and soldiers from the possibility of being subjected to predatory lending practices.
Mark Corbett utilized his own websites to advertise a deal specifically targeting veterans with retiree or disability pensions, offering them the ability to purchase a portion of their future pension payments in exchange for a lump sum. Veterans would use an online portal to redirect their pension payments to a bank account controlled by one of Corbett’s Doe companies, the name Corbett gave the companies he served as an agent for. Under federal law, it is illegal to assign a veterans pension to a third party. Several veterans warned Corbett that the transactions he was facilitating were in violation of the law, but Corbett continued. These deals operated as loan products, with up-front payment exchanged for installment payments, which required Corbett to inform veterans of the interest-rates attached to the transactions, something he never did. Instead, Corbett noted in written materials sent to veterans that the transactions were not loans.
The Consumer Financial Protection Bureau did deem Corbett’s actions as “deceptive and unfair”, claiming they “cause substantial injury to veterans”, but only issued Corbett a statement asking him to cease these practices, along with an order to cooperate with ongoing investigation plus the $1 fine. If Corbett did not pay the $1 fine within 10 days, he would have to pay . The CFPB’s order claimed that Corbett could not pay a more significant fine “based on sworn financial statements” that he provided to the Bureau, insinuating that Corbett did not have any ability to pay.
Before Kraninger took over the Bureau, then-acting director Mick Mulvaney stated that “under Dodd-Frank, the CFPB had no authority to audit lenders for compliance with the Military Lending Act” which was a reversal of the Obama administration’s view of the bill. Mulvaney became so well-known for reducing fines for consumer protection law violations that these fines started to be known as the “Mulvaney discount”.
US Representative Katie Porter also expressed her dismay over the $1 fine, stating that the country “should be able to say our military veterans” are not being cheated. The $1 fine is reminiscent of the CFPB’s order for Richard Moseley Sr. and his son Richard Moseley Jr., who were ordered to pay just $1 after being caught running a fraudulent payday loan scheme in Kansas City.