The Consumer Financial Protection Bureau (CFPB) has dropped its investigation into World Acceptance Corp., which had been accused of taking advantage of low-income borrowers.
According to American Banker, the Greenville, South Carolina-based company announced it received a letter from the consumer agency "indicating the investigation into the company's marketing and lending practices has been completed."
"The CFPB noted it does not intend to recommend enforcement action," the company said in a press release.
“This is a significant step forward for the company,” stated interim President and CEO Jim Wanserski. “During the investigation, I understand our team fully cooperated with the bureau and responded to every request for information within the specified deadlines."
In 2014, the CFPB issued a civil investigative demand against World Acceptance, which is one of the largest small-loan consumer finance companies in North America, operating 1,331 offices in 15 U.S. states and Mexico.
The investigation was sparked by a ProPublica report alleging that the company took advantage of low-income consumers, convincing them to become repeat borrowers so they would become stuck in a “debt cycle.”
While the CFPB declined to comment on the decision to drop the investigation, consumer advocates were quick to speak up in opposition. It was pointed out that CFPB’s acting director Mick Mulvaney, who hails from South Carolina, received at least $4,500 from the company’s political action committee as a lawmaker.
“The Consumer Financial Protection Bureau was established to protect consumers from predatory lenders like World Acceptance Corporation, but under Mick Mulvaney’s control, the Bureau is undermining that important mission,” Karl Frisch, executive director of Allied Progress, said in a news release, according to The State. “Worse still, Mulvaney’s CFPB appears to be rewarding bad financial actors who also happen to be his campaign contributors.”
Senator Elizabeth Warren went on to say that "dropping this case is more evidence that Mick Mulvaney is just using his time at CFPB to pay back the donors who funded his political career."
Shares of the company jumped almost 6 percent after the announcement.