California-based Zero Parallel LLC has been hit with a $100,000 fine by the CFPB, which accuses it of intentionally steering customers toward predatory payday lenders.
Zero Parallel is not itself a lender, but an aggregator which identifies potential borrowers for short term lenders and sells their information to them. This is the first big move on a firm of Zero Parallel's kind — and signals an emerging interest in the online side of the small dollar lending industry, which exists across state lines in the U.S. and is a very activity growing concern.
Customers who visited Zero Parallel's site filled out some forms and then were redirected to a lender’s site so they could actually take on the transaction. How did the firm manage that little bit of matchmaking? By selling leads to the highest bidder, according to the CFPB.
That, by itself, is not against the law — but Zero Parallel also allegedly sold applications to lenders it knew did not follow states’ usury laws, interest-rate restrictions and prohibitions on who can make the loans, and kept borrowers in the dark about risks and costs.
And Zero Parallel's borrowers did not know they were taking out illegal loans.
The U.S. Consumer Financial Protection Bureau has been working for years on the payday loan industry. These short-term loans are popular with the borrowers who use them, but are often criticized as being predatory on consumers with overly high interest rates.
Zero Parallel will pay the fine without admitting or denying the allegations, the CFPB said. The agency also said it had reached an agreement with Zero Parallel’s owner, Davit Gasparyan, to resolve similar charges filed last year against his previous company, T3Leads, with a $250,000 fine.
Zero Parallel did not return calls requesting comment.