Judge Grants Petition from CFPB to Enforce $50M Order Against Payday Lender, CEO

A District Court judge in Kansas has granted a petition from the Consumer Financial Protection Bureau to enforce an administrative order that assessed more than $50 million in fines and restitution against an online lender and its chief executive, even though the order has been appealed to the Court of Appeals for the Tenth Circuit.

A copy of the ruling in the case of CFPB v. Integrity Advance and James Carnes can be accessed by clicking here.

The CFPB accused Integrity Advance of misleading individuals regarding the terms of the loans they originated, wrongfully requiring the individuals to provide access to their bank accounts, and taking money from those accounts without their approval back in 2015. An administrative law judge assessed restitution in the amount of $38 million and fines in the amount of $7.5 million against the company and $5 million against Carnes. Richard Cordray, then director of the CFPB, appealed the ruling to a different judge, who upped the fines and restitution to $132 million. That amount was appealed and the original fines were assessed. Under the terms of the enforcement order, the money was ordered to be repaid within 30 days of the execution of the agreement, or the funds were to be placed in an escrow account if the order was appealed. But neither of those have occurred, according to the CFPB.

Carnes filed a response to a show show-cause order, but Integrity did not, thereby forgoing its right to oppose the petition. Since the appellants did not seek a stay of the final order from the Tenth Circuit when they filed their appeal, and the Court is not permitted to stay enforcement of or suspend the Final Order, its hands were tied, ruled Judge John Lungstrum of the District Court for the District of Kansas.

“…the power to suspend the Final Order or stay its enforcement rests only with the Tenth Circuit,” Judge Lungstrum wrote. “Mr. Carnes has not cited any authority indicating that this Court may or should refuse to grant a petition for enforcement under this statute.”

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