A company specializing in lending to soldiers and other individuals affiliated with the military entered into a settlement with the CFPB to resolve allegations that it conditioned its installment loans to service-members on repayment by allotment (i.e., by requiring a paycheck deduction) in violation of the Military Lending Act.
The settlement also resolved allegations that the lender required all of its borrowers to provide bank account information and preauthorize electronic fund transfers on the next business day after any missed payment. According to the Consent Order, these practices violated Section 1693k(1) of the Electronic Fund Transfers Act and Section 1036 ("Prohibited Acts") of the Consumer Financial Protection Act.
The lender agreed to (i) a $2.175 million civil money penalty and (ii) injunctive relief to cease ongoing violations and prevent future violations.
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