LendingClub - Paycheck-to-Paycheck Report July 2023

CFPB Bans Enova From Offering Certain Consumer Loans

Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) has ordered online lender Enova International to pay a $15 million penalty, banned it from offering certain consumer loans and required it to tie executive compensation to its compliance with federal consumer financial protection laws.

The penalty comes after the CFPB determined that Enova withdrew funds from customers’ bank accounts without permission, made deceptive statements about loans and canceled loan extensions, the agency said in a Wednesday(Nov. 15) press release.

The other enforcement actions follow CFPB’s determination that the firm violated a 2019 CFPB order that it stop illegal conduct, the release said.

“Enova decided to keep flouting the law after it was caught taking advantage of its customers, and violated a law enforcement order,” CFPB Director Rohit Chopra said in the release.

In its own press release announcing its settlement with the CFPB, Enova said that these issues arose in a small fraction of the millions of customers and tens of millions of transactions it served and processed.

The company self-reported most of the issues to the CFPB, provided redress to customers who were impacted, and said the consumer loan processing issues “arose from unintentional technical systems and processing errors which have since been addressed,” according to the release.

“We take any errors in our systems very seriously, especially those that impact our customers, and will continue to invest in our technology, systems and compliance processes to prevent, identify and ensure appropriate resolution of errors,” Enova President of Consumer Lending Ranning Li said in the release.

The CFPB reported that when investigating Enova’s compliance with its 2019 order, the agency found that the company was continuing to engage in illegal behavior and that this behavior had affected more than 111,000 customers.

Enova, which offers unsecured installment loans and lines of credit to consumers through its subsidiaries CashNetUSA and NetCredit, withdrew funds from consumers’ accounts without obtaining their express informed consent, canceled loan extensions it had granted certain consumers, failed to tell consumers that making an interim partial payment after being granted a loan extension would result in cancellation of the loan extension, and failed to provide consumers copies of signed authorizations for recurring electronic fund transfers, according to the CFPB press release.

Enova said in its release that it disagrees with the agency’s characterization of the issues but is pleased to have resolved the matter.

“We understand and appreciate the role of regulators in providing clear guidance and sound regulation based on facts and current market capabilities and will work with the CFPB to rapidly complete the agreed upon actions,” the company said in the release.