CFPB goes after Canadian payday lenders
A collection of Canada-based payday lenders faces a lawsuit filed by the U.S. Consumer Financial Protection Bureau. The CFPB on Tuesday alleged that the companies collected money that wasn't owed and issued illegal loans with outrageous interest rates.
Because many of the loans from companies connected to NDG Enterprise, which were issued to consumers in all 50 states, were in violation of state usury laws, the agency said they're considered void. The CFPB said it wants to stop the allegedly illegal lending and recover money for consumers.
"We are taking action against the NDG Enterprise for collecting money it had no right to take from consumers," CFPB Director Richard Cordray said in a statement. "Companies making loans within the U.S. have to comply with federal law, and the Consumer Bureau will work to ensure that American consumers receive the protections and fair treatment they deserve."
The lawsuit offered some examples of the fees and interest rates the companies were charging. APRs ranged from 599 percent to more than 700 percent on 14-day loans of $100-$1,500. In addition to interest, consumers were hit with fees of $23-$405 per loan depending on its amount. Those rates were in excess of limits set by numerous states.
In addition, the companies were accused of making false threats, deceiving consumers about how much they owed and illegally taking money from employers' payroll accounts.
Companies affiliated with NDG named in the lawsuit include Northway Financial Corp., Northway Broker, E-Care Contact Centers, Blizzard Interactive, Sagewood Holdings, New World Consolidated Lending, New World Lenders, Payroll Loans First Lenders and New World RRSP Lenders. Most of the companies are Canadian-based. Northway Financial and Northway Broker are incorporated in Malta, the CFPB said.
