The United States District Court for the Southern District of Florida recently approved a Final judgment and order stipulated to solve the CFPB allegations that a company and its CEO distorted the APRs associated with lending to borrowers and the risks associated with the deposits used to fund those loans, in violation of the Consumer Financial Protection Act (CFPA).
The company is a Florida-based limited liability company. The CFPB alleged that starting in 2017, the company offered short-term, high-interest loans to drivers who worked with ride-sharing companies. The company told borrowers that the APR associated with these loans was 440%, when in fact the APR ranged from around 975% to 978%. In June 2020, the company began receiving deposits from consumers to fund driver loans. The company falsely claimed that the deposits had a guaranteed APY of 15%, were comparable to savings products from banks, and were FDIC insured up to $ 500,000. In addition, the loans were bad under the Florida Usury Act, which capped interest rates at 45% of the APR. The company also distorted the rate at which new consumers deposit funds.
Under the final judgment and stipulated order, the company and its CEO are prohibited from engaging in any deposit-collecting activity, or from collecting, selling or assigning rights in the loans. The company and its CEO are also required to pay $ 100,000 in civil fines and about $ 1 million in consumer restitution.
The company and its CEO neither admit nor deny the CFPB’s allegations.