The Federal Deposit Insurance Corp. announced a settlement Thursday with the Bank of Lake Mills in Wisconsin and two affiliated lenders, Freedom Stores and Military Credit Services, over unfair and deceptive lending practices.
The agency ordered restitution to harmed consumers totaling $3 million and also assessed civil money penalties of $151,000 against the $203 million-asset Bank of Lake Mills, $54,000 against Freedom Stores and $37,000 against Military Credit Services. In the orders against the three companies, the FDIC said that Freedom Stores and Military Credit Services engaged in deceptive marketing of loans on the bank’s behalf, as well as deceptive marketing of add-on products.
The agency said the three parties violated the Federal Trade Commission Act by, among other things, charging interest to consumers who paid off their loans within six months when those loans were promoted as interest free for six months; selling add-on products without clearly disclosing their terms; and failing to give consumers the opportunity to exercise the monthly premium payment option in conjunction with the purchase of debt cancellation coverage.
Freedom Stores was fined by the Consumer Financial Protection Bureau in 2014 for illegal debt collection practices against service members, and Military Credit Services was also fined by the bureau last year for improper contract disclosures.
Freedom Stores is a furniture and electronics retailer that caters to military members and offers in-store financing, and Military Credit Services is a consumer credit lender that makes in-store loans. The restitution plan must cover past and present borrowers who were harmed by those lending practices between 2013 and 2015, the regulator said. Additionally, the FDIC is requiring all three parties to take steps to comply with the FTC Act.