The Consumer Financial Protection Bureau has fined Enova International $15 million, banned the company from originating some payday loans and ordered the online lender to tie executive compensation to compliance with federal consumer financial protection laws.
The CFPB said Thursday that it found Enova, a publicly traded company based in Chicago, continued to engage in "unfair acts or practices" after agreeing to a previous CFPB consent order. In 2019, Enova paid a $3.2 million fine but was not required under former CFPB Director Kathy Kraninger to provide redress to consumers.
The CFPB said that in a follow-up investigation the bureau identified violations of federal consumer protection law by Enova that involved over 111,000 consumers. The violations included debiting consumers' bank accounts without permission, and failing to honor loan extensions it had promised to some payday borrowers.
"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 a press release. "Today's action imposes a $15 million penalty, bans the company from certain lines of business, and reforms executive compensation."
Under the
The CFPB also required that Enova prepare a report confirming that the company's board of directors review all executive compensation agreements and provide a copy of the report to the CFPB. Executive compensation must comply with "the provisions of the Consent Order and Federal consumer financial law relevant to that executive's area of responsibilities or department," the CFPB said.
In a statement, Enova referred to the violations as "loan processing issues" that affected a small number of customers.
"While the errors identified in this settlement are similar to those addressed in the 2019 order, they do not arise from deliberate attempts to avoid law, but instead resulted from unintended computer and system errors," the company said in a statement.
Enova said that it self-reported most of the issues to the CFPB and provided appropriate redress to impacted customers.
"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," Ranning Li, Enova's president of consumer lending, said in a statement. "While the items identified in this order represent a small fraction of our customers and transactions, we remain committed to treating customers fairly and enhancing business practices to reduce errors and address issues promptly."
Enova said it "fully cooperated" with the CFPB throughout the investigation. However, in 2021, when the CFPB under Chopra issued a civil investigative demand to determine whether the company remained in compliance with the previous consent order, Enova petitioned to have the investigation modified or set aside. The bureau
Enova said the settlement will not have a material impact on the company. In the third quarter, Enova posted a 21% jump in quarterly revenue to a record $551 million.
The CFPB alleged that Enova deceived borrowers by making false statements or omitting critical information about their loans.
For example, the company failed to tell consumers who had been granted a loan extension that making an interim partial payment would result in cancellation of the loan extension. It also misrepresented the amount that Enova would charge to consumers who made interim partial payments. The CFPB said that Enova also misrepresented the amounts due on certain loans, the due dates for certain loan payments and that consumers could skip certain loan payments.
In addition, the company initiated recurring electronic fund transfers from consumers' bank accounts without providing the consumer with a copy of a signed authorization identifying the particular bank account that the consumer had authorized for such transfers, in violation of the 2019 order the CFPB said.
