Enova International, a large online payday and installment lender, has agreed to pay $3.2 million to settle allegations by the Consumer Financial Protection Bureau that it extracted funds from consumers' bank accounts without their authorization.
The CFPB said Enova, a publicly traded company based in Chicago, engaged in “unfair acts or practices” by debiting consumers’ accounts and by failing to honor loan extensions that it had granted to 308 customers.
The bureau alleges the lender improperly debited "millions of dollars" from over 5,000 accounts.
“As a result, consumers experienced or were likely to experience unexpectedly low or negative balances, and were unable to use funds for other purposes as anticipated,” the bureau said in its 19-page consent order.
The CFPB said it has barred Enova from making recurring electronic fund transfers from an account without first obtaining valid authorization.
The company agreed to pay a $3.2 million civil money penalty to the CFPB. But the bureau did not require any customer remediation.
Nevertheless, the CFPB said Enova made “unsuccessful attempts to debit consumers’ accounts, which resulted in consumers being charged insufficient funds fees and other bank fees.”
Enova said in a statement posted on its web site that it had reimbursed affected customers, but did not specify amounts of the refunds.
“Customers were contacted for remediation of damages they may have incurred,” the company said in the statement.
Enova said it identified and self-disclosed what it called “payment processing issues” to the CFPB in 2014, and those issues “have since been resolved.”
"Any errors in our systems, especially those that impact our customers, are taken very seriously by our team, and we have invested in technology and processes to ensure appropriate resolution of such errors," said Sean Rahilly, chief compliance officer and general counsel at Enova.
The company did not respond further to a request for comment.
The 19-page consent order said that in 2010, Enova began using consumer bank account information that it obtained from loan applications purchased from lead generators.
From 2010 to late 2014, Enova “did not inform consumers that it would debit, or had debited, their bank accounts without obtaining consumers’ authorization to do so,” the CFPB said. “Thus, consumers could not reasonably have avoided the injury they suffered as a result of Enova’s illegal debiting.”
A key tenet of the federal prohibition against unfair practices is whether a consumer can reasonably avoid injury.
The CFPB also ordered Enova’s board of directors to review all submissions required by the consent order and that the company submit compliance reports to the bureau.
