CFPB hands out $1 penalties in proposed settlement

Former payday lender Think Finance would split the $7 penalty across its seven entities involved in the lawsuit initially filed by the CFPB on behalf of consumers in 17 states in November 2017. The CFPB alleged the entities violated the Consumer Financial Protection Act with regard to illegal collections on voided loans through deceptive, unfair, and abusive practices.

The $7 in penalties is more symbolic than anything—the focus of the Think Finance case is a nearly $40 million restitution fund agreed to in July 2019 being set up to repay harmed consumers. The class action settlement also required the cancellation of outstanding loans serviced by Think Finance under several tribal lenders mentioned at length in the CFPB’s lawsuit.

Since then, Think Finance announced its exit from bankruptcy proceedings in December, emerging as a reorganized business under the name TF holdings. The CFPB’s proposed settlement extends to the reorganized business and seeks to prohibit the business from offering or collecting on loans to consumers in any of the 17 states included in the lawsuit if the loan violates state lending laws.

Future compliance with the proposed order would be overseen by the CFPB’s new assistant director for enforcement, Thomas Ward. Ward was officially named to his post on Jan. 30 after his consideration for the position received scrutiny from the House Financial Services Committee. Ward, who previously worked in a politically appointed role at the Justice Department, was cleared for the CFPB job by the Office of Personnel Management, CFPB Director Kathleen Kraninger maintained in a response letter.

Such is life at the independent agency, which is set to face the Supreme Court next month in a case reviewing whether its structure is unconstitutional.

“We were always under the microscope,” former head of enforcement Tony Alexis, now a partner in law firm Goodwin’s Financial Industry practice, told Compliance Week. “There was always an incredible amount of scrutiny that was put on the Bureau. It’s not for me to say it was fair or unfair, it’s just how our government works.”

Alexis believes Ward’s former work at the Department of Justice could be an “incredible bonus” to the CFPB. He advises Ward to “acquaint yourself with the institutional tools and support you already have,” noting the CFPB’s experience and growth since its formation in 2011 should prove an asset in its enforcement efforts moving forward, should the agency not be negatively impacted by a Supreme Court ruling.