The Consumer Financial Protection Bureau announced today that has filed suit against an offshore online payday lender, NDG Enterprise, for collecting money from borrowers that it allegedly had no right to do.
The CFPB named a web of other entities in its complaint, including NDG Financial Corp., Northway Financial Corp., Ltd., Northway Broker, Ltd., E-Care Contact Centers, Ltd., Blizzard Interactive Corp., Sagewood Holdings, Ltd., New World Consolidated Lending Corp., New World Lenders Corp., Payroll Loans First Lenders Corp., and New World RRSP Lenders Corp. Sagewood Holdings is the majority owner of NDG Enterprise, which owns all of the other entities.
NDG stands accused of:
- Making false threats to consumers. Collectors allegedly threatened imprisonment or arrest when attempting to collect debts
- Deceiving customers about their debts. NDG told borrowers they were obligated to repay the loans, which was not true
- Used illegal wage-assignment clauses. The defendants included language in their loan agreements that allowed them to take payments directly from consumers’ payroll accounts, which is illegal.
The defendants attempted to collect loans in 17 states and tried to convince borrowers that state and federal law did not apply to them.
According to the complaint, most loans were for amounts ranging between $100 and $500 with finance charges of between $19.98 and $26.98 per $100 borrowed.
Seven states, including California on three separate occasions, had sent cease and desist letters to the defendants, to get them from originating unlicensed loans.
What the defendants told potential ACH payment processors from the U.S., though, was a different story.
The complaint does not mention the dollar amount or total number of loans that defendants made during the period in question.