On November 15, 2023, the CFPB ordered online lender Enova International Inc. to pay a $15 million penalty for widespread illegal conduct including withdrawing funds from customers’ bank accounts without their permission, making deceptive statements about loans, and cancelling loan extensions. In 2019, Enova paid a $3.2 million penalty to the CFPB and was ordered to cease its illegal conduct.
From CFPB Director Rohit Chopra’s statement:
“Enova decided to keep flouting the law after it was caught taking advantage of its customers, and violated a law enforcement order. Today’s action imposes a $15 million penalty, bans the company from certain lines of business, and reforms executive compensation.”
Enova is a publicly traded nonbank lender that extends or arranges unsecured installment loans and lines of credit to consumers in 37 states through its CashNetUSA- and NetCredit-branded subsidiaries. Up until 2022, Enova also extended unsecured payday loans to consumers through its CashNetUSA-branded subsidiaries.
The CFPB investigated Enova’s compliance with the 2019 order and found that the company was continuing to engage in illegal behavior. In particular, the CFPB found that Enova violated the 2019 order by:
Withdrawing funds without borrowers’ consent. Enova withdrew or tried to withdraw funds from consumers’ accounts without having obtained their express informed consent as required by the 2019 order.
Backtracking on loan extensions. Enova cancelled loan extensions it had granted to certain consumers and in most instances debited such consumers’ bank accounts for the full loan payment instead of only a smaller loan extension fee.
Failing to provide consumers copies of signed authorizations. Enova 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.
Deceived borrowers with false statements and omissions. In addition, Enova made misrepresentations by failing to tell consumers that making an interim partial payment would result in cancellation of the loan extension including the amount that Enova would charge to consumers who made such an interim partial payment, among others.
The CFPB’s consent order orders Enova to:
Stop offering certain short-term loans. Enova is prohibited from offering or providing closed-end consumer loans that must be substantially repaid within 45 days for a period of seven years.
Stop its illegal practices.
Reform executive compensation. Enova’s executive compensation policies and agreements must consider the actions taken by the executive to ensure that the executive’s business or department complies with the order and federal consumer financial law.
Provide redress to consumers. Enova must provide redress to all consumers whose accounts Enova debited without their express informed consent, including by returning to those consumers all unlawfully debited amounts and associated fees, costs, and interest.
Pay $15 million civil penalty to the CFPB victims relief fund.
Read the CFPB’s press release here.
The consent order can be found here.