CFPB Cracks Down On Credit Services Provider For Gouging And Trapping Consumers

On September 13, the CFPB filed a complaint against a nonbank corporation and its CEO, alleging that the company engaged in deceptive and abusive acts through misleading advertising and unjustified, exorbitant fees related to its credit card program. The CFPB claims these actions violate both the Consumer Financial Protection Act and the Truth in Lending Act.

The company's business model involved offering consumers enrollment in a membership that included an unsecured, open-end line of credit. According to the CFPB, the company and its CEO misled consumers into joining their membership program through deceptive marketing. The complaint asserts that consumers were also subjected to unlawful and excessive fees, while facing significant obstacles when attempting to cancel their membership or obtain refunds. The Bureau alleges that the membership cards came with periodic fees, and were targeted toward financially vulnerable, subprime consumers. Between 2017 and 2021,