On November 18, 2015, the Consumer Financial Protection Bureau (“CFPB”) announced that it initiated an administrative proceeding against online lender Integrity Advance, LLC, and its CEO, for allegedly deceiving consumers about the cost of short-term loans.

From May 2008 through December 2012, Integrity Advance originated and serviced short-term online loans ranging from $100 to $1,000.  The CFPB alleges that Integrity Advance engaged in unfair and deceptive practices related to the origination and servicing of the loans, in violation of the Truth in Lending Act, Electronic Fund Transfer Act, Dodd-Frank Wall Street Reform and Consumer Protect Act.

Specifically, CFPB alleges that Integrity Advance unlawfully:

  • Hid the total cost of loans from consumers by only disclosing the cost of repayment based on a single payment, even though upon default the loans would rollover up to four times causing additional fees and costs to accrue, which were not disclosed;
  • Required consumers to agree to repay their loans via pre-authorized Automated Clearing House (“ACH”) payments; and
  • Hid a provision in loan agreements that allowed the company to use remotely created checks if a consumer revoked authorization for ACH payments.

CFPB’s Notice of Charges which was filed against Integrity Advance was initiated in an administrative forum and will be tried by an Administrative Law Judge.  The Notice of Charges is not yet publicly available, but it may be published on the CFPB’s website ten days after service on Integrity Advance, if permitted by the hearing officer.