The CFPB issued a consent order against an income share agreement (ISA) provider, Better Future Forward (BFF), in which it concluded that BFF’s ISAs are extensions of credit under the Consumer Financial Protection Act and Truth in Lending Act and are “private education loans” under TILA. In doing so, the CFPB alleged that BFF:
- Engaged in deceptive acts and practices by representing that its ISAs are not loans and do not create debt;
- Violated Regulation Z by failing to disclose an amount financed, finance charge, and annual percentage rate, and by omitting certain private education loan disclosures, including related to the non-dischargeability of loans in bankruptcy; and
- Violated TILA’s prohibition on charging prepayment penalties on private education loans by setting the ISA payment cap at 110% of the funding amount.
