The Consumer Financial Protection Bureau (CFPB) recently filed suit against loan servicing company Think Finance for deceiving consumers into repaying loans that the individuals did not legally owe.
The suit, filed in federal court, alleges that Think Finance collected on loans that were void under state laws. The company, which offers and services lines of credit and installment loans over the internet, made deceptive demands and took money from consumers’ bank accounts for debts that were not legally owed. The CFPB is looking to recoup costs for harmed consumers and impose a penalty.
“Think Finance wrongly took money from people’s bank accounts, so we are seeking relief for consumers and a civil money penalty,” CFPB Director Richard Cordray said.
Many states have laws that nullify loans if the interest rates are higher than the state allows. They also nullify loans if a lender is not licensed to conduct business in the state. Thus, lenders and servicers cannot collect on debt that is legally void.
Think Finance sought loan payments even though the loans in question were void under state law. The company called and sent letters demanding payment for debts, and even made electronic withdrawals from consumers’ bank accounts for debts that they were under no obligation to pay.
The bureau is seeking monetary relief for consumers, penalties for Think Finance, and injunctive relief, including a prohibition on Think Finance’s collecting on void loans.