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CFPB Sues Online Lenders Collecting on Debts Not Owed
On Thursday, April 27, 2017, the CFPB took action against four online lenders – Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc. – for allegedly deceiving consumers by collecting debt not legally owed. In a suit filed in federal court, the CFPB alleged the four lenders could not legally collect on these debts because the loans were void under state laws governing interest rate caps or the licensing of lenders. The CFPB claims the lenders made deceptive demands and illegally took money from consumer bank accounts for debts consumers did not legally owe. The CFPB sought to stop the unlawful practices, recoup relief for harmed consumers, and impose a penalty.
Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc. are online installment loan companies in Upper Lake, California. Since at least 2012, Golden Valley Lending and Silver Cloud Financial have offered online loans of between $300 and $1,200 with annual interest rates ranging from 440 percent up to 950 percent. Mountain Summit Financial and Majestic Lake Financial began offering similar loans more recently.