(TriceEdneyWire.com)—Four online lenders offering high-cost, small-dollar installment loans face a federal lawsuit alleging that the lenders collected on debts that consumers did not legally owe. Filed in late April by the Consumer Financial Protection Bureau, the lawsuit charges online lenders Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial as having engaged in unfair, deceptive, or abusive acts. The lawsuit also alleges the businesses did not make proper disclosures to consumers.
Consumers living in 17 states are affected by the lawsuit and include residents of Arizona, Arkansas, Colorado, Connecticut, Illinois, Indiana, Kentucky, Massachusetts, Minnesota, New Jersey, New York, North Carolina, and Ohio. If successful, the lawsuit could result in restitution for affected consumers, ban future loan collections, and civil monetary penalties.
According to CFPB, since at least 2012, the lenders sold installment loans valued from $300 and as large as $1,200 that carried annual percentage rates from a low of 440 percent to as high as 950 percent. These high interest rates allegedly violate state usury laws and in turn, void all of part of the loans. CFPB alleges that the four corporations unlawfully collected loans as the transactions violated state laws, as well as the federal Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. As such, the firms: