CFPB and New York Attorney General File Lawsuit Against Company that Lured 9/11 Heroes Out of Millions of Dollars
On February 7, the CFPB announced that it has—in partnership with the New York Attorney General (NYAG)—filed a complaint in federal district court against a finance company and two affiliates that offer lump-sum advances to consumers entitled to periodic payouts from victim compensation funds or lawsuit settlements. A press release from the NYAG’s Office can be accessed here.
The Bureau and the NYAG claim, among other things, that the defendants misled World Trade Center attack first responders and professional football players in selling expensive advances on benefits to which they were entitled and mischaracterized extensions of credit as assignments of future payment rights, thereby misleading their victims into repaying far more than they received. Specifically, according to the allegations in the complaint, the New Jersey-based companies: (i) used “confusing contracts” to prevent the individuals from understanding the terms and costs of the transactions; (ii) lied to the individuals by telling them the companies could secure their payouts more quickly; (iii) misrepresented how quickly they would receive payments from the companies, and (iv) collected interest at an illegal rate.
These actions, the two regulators argue, constitute violations of the Consumer Financial Protection Act ban on unfair, deceptive, or abusive practices, New York usury laws, and other state consumer financial protection laws. The lawsuit seeks to end the company’s illegal practices, obtain relief for the victims, and impose penalties.