The Consumer Financial Protection Bureau announced Friday (August 10) that it entered into a settlement agreement with Richard Moseley, Sr., Richard Moseley, Jr., and 20 interrelated corporate entities 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 financial 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 deposited loans into consumers’ bank accounts, and would then withdraw biweekly finance charges indefinitely. Consumers, the CFPB alleges, never saw the loan agreements and had no idea about the account activity until after the loan was deposited. For the consumers that saw the loan terms, the written terms weren’t true and the repayment obligations were misrepresented.
In November 2017, a jury in New York found Moseley, Sr. guilty of: conspiracy to collect unlawful debts; collection of unlawful debts; conspiracy to commit wire fraud; wire fraud; aggravated identity theft; and making false disclosures under the Truth in Lending Act. Moseley, Sr. has appealed that conviction.
Under the terms of the settlement, the defendants are banned from the industry, have to forfeit about $14 million in assets and pay a $1 civil money penalty. The civil penalty amount is based in part on the defendants’ limited ability to pay. The order imposes a judgment for $69 million for purposes of paying consumer redress, but, in light of the defendants’ limited ability to pay, the judgment will be suspended upon compliance with other requirements.
The move by the CFPB comes at a time when payday lenders are seeing a reduction in the agency’s oversight. In late June Mick Mulvaney, 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.