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On December 1, the CFPB and a financial services company issued a provision seeking resolution of a CFPB lawsuit alleging that a financial services company made false, misleading and inaccurate marketing representations to consumers regarding its offering of a “high yield” savings account. filed a proposed court order of In its original complaint, the CFPB alleges that he made four separate false representations to a consumer in violation of her CFPA by a financial services company.
- Consumer deposits were used to originate loans to medical professionals, and in fact we never used deposits to originate loans, nor did we contract investors to purchase loans.
- Consumer deposits are actually invested in actively traded securities and cryptoassets or lent to investors against individual stock portfolios as collateral, if not used to originate loans, the FDIC will be held in your insurance account.
- It was a commercial bank, and although its high yield savings account resembled a traditional savings account, it wasn’t really a commercial bank, it invested consumer deposits in highly volatile securities.
- The company’s high-yield savings accounts were paying interest rates of 5% to 6.25% in the years prior to 2019, but actually didn’t even start accepting consumer deposits in August 2019.
The proposed settlement provides for the following agreed actions for the financial services companies to: (i) refund approximately $19 million to approximately 400 affected depositors; ) will pay the CFPB a fine of $391,530, some of which will be remitted as financial services companies have already paid fines to the SEC as a result of similar actions.
Practice: This CFPB action makes it clear that enforcement of penalties for consumer finance companies involved in false advertising remains a top priority for federal consumer protection agencies. see here). This action also strengthens the agency’s recent crackdown on dark patterns, junk fees, and similar fraudulent practices (see previous blog posts here and here). Therefore, financial services firms that market to consumers must review complaints and continually verify that their descriptions of goods and services to consumers are accurate and clear.
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