WASHINGTON — The Consumer Financial Protection Bureau (CFPB) has ordered online lender Enova International Inc. to pay a $15 million penalty for what it said is “widespread illegal conduct,” including withdrawing funds from customers’ bank accounts without their permission, making deceptive statements about loans, and cancelling loan extensions.
This isn’t the first time Enova has been fined. The company paid a $3.2 million penalty to the CFPB in 2019, and was ordered to cease its illegal conduct, the Bureau said.
“For violating that order and continuing to break the law, Enova is now banned from offering certain consumer loans, must provide redress to the consumers it harmed, and is required to tie executive compensation to the company’s compliance with federal consumer financial protection laws,” the CFPB said.
What Company Does/Did
Enova is a publicly traded nonbank lender headquartered in Chicago that extends or arranges unsecured installment loans and lines of credit to consumers in 37 states through its CashNetUSA- and NetCredit-branded subsidiaries.
Up until 2022, Enova also extended unsecured payday loans to consumers through its CashNetUSA-branded subsidiaries, the CFPB said.
“After taking action against Enova in 2019, the CFPB investigated Enova’s compliance with the 2019 order. The investigation found that the company was continuing to engage in illegal behavior, affecting more than 111,000 consumers,” according to the CFPB.
The Specific Findings
Specifically, the CFPB said it found in its additional investigation that Enova:
- Withdrew funds without borrowers’ consent. “Enova withdrew or tried to withdraw funds from consumers’ accounts without having obtained their express informed consent as required by the 2019 order,” the CFPB said. “In some cases Enova used bank account information it had purchased from online lead generators, overwriting the bank account information that borrowers had authorized Enova to use.”
- Backtracked on loan extensions. “Enova cancelled loan extensions it had granted to certain consumers and in most instances debited such consumers’ bank accounts for the full loan payment instead of only a smaller loan extension fee, in violation of the 2019 order.”
- Deceived borrowers with false statements and omissions. “Enova failed to tell consumers who had been granted a loan extension that making an interim partial payment would result in cancellation of the loan extension and misrepresented the amount that Enova would charge to consumers who made such an interim partial payment,” the CFPB said. “Enova also misrepresented the due date for certain loan payments, that consumers could skip certain loan payments, and the amounts due on certain loans.”
- Failed to provide consumers copies of signed authorizations. “Enova initiated recurring electronic fund transfers from consumers’ bank accounts without providing the consumer with a copy of a signed authorization identifying the particular bank account that the consumer had authorized for such transfers, in violation of the 2019 order,” according to the Bureau.
Enforcement Action
The CFPB said its order enforces the 2019 order, and requires Enova to:
- Stop offering certain short-term loans. For a period of seven years, Enova is prohibited from offering or providing closed-end consumer loans that must be substantially repaid within 45 days.
- Stop its illegal practices. Enova may not engage in certain specified practices, including initiating attempts to debit funds from a consumer’s account without having obtained the consumer’s express informed consent and failing to honor loan extensions granted to consumers.
- Reform executive compensation. Enova’s executive compensation policies and agreements must consider the actions taken by the executive to ensure that the executive’s business or department complies with the order and federal consumer financial law.
- Provide redress to consumers. Enova must provide redress to all consumers whose accounts Enova debited without their express informed consent, including by returning to those consumers all unlawfully debited amounts and associated fees, costs, and interest.
- Pay a civil penalty. Enova will make a civil penalty payment of $15 million to the CFPB victims relief fund.
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