CFPB

Mulvaney Reduces Penalty On Payday Lender Security Finance

The acting director of the Consumer Financial Protection Bureau has cut a fine against payday lenders in half, as well as dropped some of the agency’s earlier claims in the case.

Mick Mulvaney fined South Carolina-based lender Security Finance $5 million for harassing borrowers when collecting debt and mishandling credit report data.

But his predecessor, Richard Cordray, had wanted the company to pay $11 million: $3 million as a penalty for the debt collection and credit reporting abuses, and at least $8 million to compensate the consumers who felt forced into taking out insurance.

But Mulvaney dropped the insurance claims, which leaves no money for customers to be compensated.

“We are agreeing to this settlement to close the matter and move forward in serving our customers,” said Security Finance chief Susan Bridges in a statement, according to Reuters.

John Czwartacki, spokesman for the CFPB, said the agency’s fine was based on evidence.

“The enforcement arms of government should not be used in order to shake down the productive sector just because we can, especially when the legal case is shaky at best,” he said.

In addition, Mulvaney has dropped several cases started by Cordray. And just last week, the agency filed a response supporting reconsideration of its payday rule, which would require lenders to conduct background checks showing that borrowers can afford the loans, and to limit the number of loans made to a single borrower.

The rule, set to go into effect in August 2019, has received pushback from payday lenders, which argue that it prohibits them from issuing almost all of the loans they currently grant to consumers.

Since being appointed by President Donald Trump, Mulvaney has worked to diminish the power of the CFPB. During his short tenure, he has ousted the 25 members of the agency’s Consumer Advisory Board, as well as ended all functions of its student lending office (except for consumer education).

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