The Consumer Financial Protection Bureau announced on Friday August 10 that it had reached a settlement agreement with Richard Moseley, Sr., Richard Moseley, Jr., and 20 interrelated companies controlled by the two regarding payday loans.
In a Press release, the CFPB said the father and son violated the Consumer Financial Protection Act and other federal consumer finance laws. According to the press release, the defendants obtained consumers ‘sensitive personal and financial information from third-party data brokers and used that information to access consumers’ bank accounts without their permission. The Hydra Group would deposit loans into consumers’ bank accounts, then withdraw the bi-monthly finance charges indefinitely. Consumers, the CFPB alleges, never saw the loan contracts and had no idea of account activity until the loan was deposited. For consumers who saw the terms of the loan, the written terms were not true and the repayment obligations were distorted.
In November 2017, a New York jury found Moseley, Sr. guilty of: conspiring to collect illegal debts; collection of illegal debts; conspiracy to commit electronic fraud; electronic fraud; aggravated identity theft; and make false disclosures under the Truth in Lending Act. Moseley, Sr. appealed this conviction.
Under the settlement, the defendants are banned from the industry, must give up approximately $ 14 million in assets and pay a civil fine of $ 1. The amount of the civil fine is based in part on the limited ability of the defendants to pay. The order imposes a judgment of $ 69 million for the purpose of paying a remedy to consumers, but, given the defendants’ limited ability to pay, the judgment will be stayed if other requirements are met.
The CFPB’s decision comes at a time when payday lenders are seeing a reduction in agency oversight. In late June, Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, halved the fine on payday lenders and dropped some of the agency’s earlier claims in the case. Mick Mulvaney fined Security Finance, a South Carolina-based lender, $ 5 million for harassing borrowers while collecting debt and mismanaging credit report data. But his predecessor, Richard Cordray, had wanted the company to pay $ 11 million: $ 3 million in penalties for debt collection and credit abuse abuse, and at least $ 8 million to compensate consumers who claimed. felt compelled to take out insurance. But Mulvaney has dropped the insurance claims, leaving clients with no money to compensate.