A federal district court in the Western District of Missouri has approved a settlement between the Consumer Financial Protection Bureau, Richard Moseley, Sr., Richard Moseley, Jr., and 20 interrelated corporate entities they controlled for the unlawful origination and servicing of short-term, small-dollar online loans to consumers nationwide.
The Bureau’s complaint alleges that the defendants obtained consumers’ sensitive personal and financial information from third-party data brokers, then used that information to access their bank accounts without authorization.
According to the CFPB’s complaint, the Hydra Group deposited loans in consumers’ bank accounts, then debited biweekly “finance charges” indefinitely. In many cases, consumers never saw loan agreements and were not aware of the account activity until after the loan was deposited and finance charges were withdrawn.
The Bureau also alleges that, even when consumers did receive loan documents, the written disclosures misrepresented the price terms and repayment obligations of the purported loan.
In November 2017, a jury in New York found Moseley, Sr. guilty of: conspiracy to collect unlawful debts; collection of unlawful debts; conspiracy to commit wire fraud; wire fraud; aggravated identity theft; and making false disclosures under the Truth in Lending Act. He has appealed that conviction.
Under the terms of the new consent order, both defendants will be banned from the loan industry, forfeit approximately $14 million in assets, and pay a $1 civil money penalty.
The civil penalty amount is based, in part, on the defendants’ limited ability to pay. The order imposes a judgment for $69 million for purposes of paying consumer redress but, in light of the defendants’ limited ability to pay, it will be suspended upon compliance with other requirements.