Mick Mulvaney, the Trump administration’s financial protection czar, has decided not to pursue payday lenders accused of loansharking.
Former Consumer Financial Protection Board (CFPB) director Richard Cordray was investigating roughly a dozen payday lenders accused of charging triple-digit interest rates on cash loans before his departure. According to Reuters, Mulvaney, the new interim CFPB chief, is now sending a message to exploitative lenders that enforcing usury laws won’t be a top priority of his agency by quietly dropping cases involving several payday loan companies.
Reuters reported that, according to five separate sources, the specific investigations Mulvaney decided not to pursue would have returned approximately $60 million to consumers who were victims of loansharking. One of those companies, National Credit Adjusters (NCA), a debt collection company based in Kansas, argued the payday lenders it worked for were allowed to charge triple-digit interest rates since it was only dealing in online loans made on Native American land. Cordray countered that no collection agency could legally collect on those loans regardless of where they were made.
NCA’s case is perhaps the most egregious of the cases under review. In the CFPB’s consumer complaint database, NCA is accused of threatening legal action, falsely representing themselves as attorneys, law enforcement, and/or government officials, and attempting to collect debt that doesn’t exist. These tactics are in violation of the Fair Debt Collection Practices Act, which subjects violators to civil liabilities.
However, an attorney for NCA said the case against them was “dead,” saying Mulvaney’s agency was dropping the investigation based on his assessment that his predecessor’s case against NCA wasn’t strong.
“[Former CFPB director Richard Cordray] had a theory that was really out there and I think everything related to it is being pulled back,” Sarah Auchterlonie told Reuters.
Other payday lenders Cordray investigated for unscrupulous business practices included Security Finance, Cash Express LLC, and Triton Management Group. Mulvaney has not yet indicated whether or not he would continue action against those companies, fine them, or drop the investigations entirely.
Complaints in the CFPB database on Security Finance included collectors contacting a debtor’s employer, false statements and representation, and not validating ownership of the debt. Complaints against Cash Express LLC included debt collectors using abusive and/or profane language, not crediting accounts after payment, and unexpected interest and fees. Triton Management is accused of overcharging debtors’ bank accounts and threatening borrowers with jail or arrest for not paying.
Jake Shepherd is a freelance writer from Cleveland, Ohio. He enjoys poring through financial disclosure statements, spirited debate, and good scotch. He remains eternally optimistic about the Browns. Email him at jake.d.shepherd.21 (at) hotmail (dot) com.