A payday lender that allegedly collected money illegally faces a lawsuit filed Tuesday in federal court by the Consumer Financial Protection Bureau.

NDG Enterprise, a web of commonly controlled companies, is charged with illegally collecting loan amounts and fees that were void or that consumers had no obligations to repay. The lender allegedly falsely threatened consumers with lawsuits and prison.

The NDG Enterprise originates and collects payday loans over the Internet to consumers in all 50 states, including New York where those loans are void because they violate state usury caps and licensing requirements. 

The CFPB’s complaint names NDG Financial Corp., Northway Financial Corp. Ltd., Northway Broker Ltd., E-Care Contact Centers Ltd., Blizzard Interactive Corp., Sagewood Holdings Ltd., New World Consolidated Lending Corp., New World Lenders Corp., Payroll Loans First Lenders Corp. and New World RRSP Lenders Corp. All of the defendants, except for Northway Financial and Northway Broker, are Canadian corporations.

The CFPB is seeking to end the companies' alleged illegal practices and obtain monetary relief for consumers.

The complaint alleges, among other things, that NDG:

  • Deceived consumers about their debts: Under state law, consumers had no obligation to repay the loans in question that were made by NDG Enterprise. But NDG Enterprise told consumers expressly or by implication that they were obligated to repay loan amounts and fees that they did not actually owe.
  • Made false threats to consumers: In numerous cases, the defendants falsely represented to consumers that non-payment of debt would result in lawsuit, arrest, imprisonment or wage garnishment, despite lacking the intention or legal authority to take such actions.
  • Used illegal wage-assignment clauses: The defendants often included unlawful, irrevocable wage-assignment clauses in loan agreements. These clauses allowed the defendants to take payments directly from consumers’ employers' payroll accounts.

"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 [CFPB] will work to ensure that American consumers receive the protections and fair treatment they deserve."
Under the Dodd-Frank Act, the CFPB has the authority to take action against companies engaging in unfair, deceptive or abusive practices. The lawsuit seeks:

  • Monetary relief and damages: The CFPB wants the defendants to refund the money they took from consumers where the loan amounts were void or the consumer otherwise was not obligated to repay the loan. The complaint also seeks additional damages and costs.
  • No further violations of federal consumer laws: The CFPB wants the defendants to follow all federal consumer financial protection laws, including prohibitions on unfair, deceptive and abusive acts and practices.


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