On July 26, the CFPB
disclosed a federal
lawsuit against a point-of-sale financing company, its subsidiary, and its CEO, alleging multiple counts of consumer finance fraud under the CFPA, TILA, the EFTA, and the FCRA related to the company’s “virtual rent-to-own” product from 2015. This product enabled the identified companies to purchase household goods selected by consumers and then “lease” the goods to consumers through a 12-month term.
The CFPB alleged 19 counts against the company. The first nine counts alleged the companies violated the CFPA by using misleading phrases to advertise its “90 days same as cash” financing, deceptively representing that consumer contracts required the maintenance of “autopay,” unfairly obstructing consumers’ ability to revoke autopay authorizations, misrepresenting consumers’ ability to return goods and the means to do so, creating unfair barriers to returns, providing deceptive statements to and failing to train merchant partners, interfering materially with consumers’ ability to understand the terms of their agreements through a mobile application, misrepresenting the product as credit, and alleging the companies’ CEO assisted in carrying out the aforementioned activities.
The CFPB’s other allegations against the companies involved claims under TILA and Regulation Z (and, by extension, the CFPA) for failing to provide required disclosures in connection with their agreements. The CFPB also alleged that the companies violated the EFTA and Regulation E for impermissibly extending credit on consumers’ repayments and then again violating the CFPA. Moreover, the CFPB claimed the companies violated the FCRA and Regulation V for failing to implement written policies regarding customer information and violated the FCRA, furnishing inaccurate information, failing to conduct reasonable investigations, failing to notify consumers with furnished negative information, and unlawfully obtaining prescreened lists.
The CFPB has requested that the district court, among other things, enjoin the companies permanently from committing future violations, award damages and restitution to consumers, and award civil money penalties to the Bureau.
