CFPB settlement would bar lender from doing business in 17 states

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The Consumer Financial Protection Bureau has announced a proposed settlement with lender and loan servicer Think Finance and six subsidiaries that would resolve a 2017 lawsuit alleging the company illegally collected on consumer loans in states that have caps on interest rates.

The proposed settlement would prohibit Think Finance, which exited Chapter 11 bankruptcy in December and now calls itself TF Holdings, from offering or collecting on loans to consumers in any of the 17 states that cap interest rates.

In its announcement Wednesday, the CFPB also said it expects the company will set aside more than $39 million to be given to harmed consumers as part of a global settlement that includes settlements with the Pennsylvania Attorney General’s office and private class-action litigants.

The amount to be dispursed to harmed consumers “may increase over time as a result of ongoing, related litigation and settlements,” the CFPB said.

The bureau also fined the Irving, Tex., company a $7 civil penalty, or $1 for each entity.

Think Finance operated an online loan origination and servicing platform and had partnered with tribal lenders to offer installment loans online.

The CFPB alleged in its complaint that Think Finance made deceptive demands and illegally took money from consumers' bank accounts for debts they did not owe because the loans were either partially or completely void in 17 states that have usury limits. The bureau said the company and affiliated tribal lenders "operated as a common enterprise," and engaged in unfair, deceptive and abusive acts and practices by affiliating with tribal lenders to offer online loans and lines of credit to avoid state rate caps.

Last year a federal appeals court ruled that Think Finance and online tribal lender Plain Green violated state and federal laws by charging interest rates in excess of state caps. Plain Green, owned by the Chippewa Cree Tribe of the Rocky Boy’s Indian Reservation in Montana, had hired Think Finance and its subsidiaries to fund and service online payday and installment loans. The company provided online lenders with loan origination software and other products.

Pennsylvania had sued Think Finance and an associated private equity firm in 2014 for operating three web sites that allowed borrowers to sign up for loans with interest rates of up to 448%, despite a state rate cap.

Martin Wong, the company's CEO, said in a December press release that the company had "steadfastly maintained that we have conducted our business in compliance with [the] law."

The company did not respond to a request for comment on the proposed settlement with the CFPB.

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