The Consumer Financial Protection Bureau has filed a lawsuit in federal court against a web of payday lending companies, alleging that they collected money that consumers did not owe and falsely threatened consumers with lawsuits and imprisonment.

The CFPB is suing NDG Enterprise, a group of 10 commonly controlled companies, seeking to end their practices and win monetary relief for affected consumers.

"We are taking action against the NDG Enterprise for collecting money it had no right to take from consumers," said CFPB Director Richard Cordray. "Companies making loans within the U.S. have to comply with federal law, and the Consumer Bureau will work to ensure that American consumers receive the protections and fair treatment they deserve."

NDG Enterprise did not immediately return requests for comment.

The ten companies — NDG Financial, Northway Financial, Northway Broker, E-Care Contact Centers, Blizzard Interactive, Sagewood Holdings, New World Consolidated Lending, New World Lenders, Payroll Loans First Lenders and New World RRSP Lenders — are all based in Canada or Malta. Sagewood Holdings has a majority interest in NDG Financial, which in turn owns the rest of the companies implicated in the lawsuit.

The companies in question originate and collect payday loans online in all 50 states, including in states where the loans were technically void because they violated state usury caps and licensing requirements.

The CFPB's complaint alleged that NDG Enterprise made false threats to consumers and misled consumers about their debts. The lender reportedly told consumers that non-payment would lead to lawsuits, arrest, imprisonment or wage garnishment, despite the fact that they had no authority or intention to carry through with these actions. Additionally, state laws stipulated that consumers were not obligated to repay the loans, but the defendant companies allegedly told consumers otherwise.

The lawsuit also argues that NDG Enterprise incorporated illegal wage-assignment clauses in its loan agreements that would allow it to pull payments directly from payroll accounts.

Overall, the CFPB hopes the lawsuit will force NDG Enterprise to refund the money taken from consumers in cases where loan amounts were void or where they were not obligated to pay. The CFPB also aims to make the companies in question adhere to federal laws, including the Dodd-Frank Act.

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