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CURO Subsidiary Sued for Misleading Consumer Loan Borrowers
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CURO Group Holdings Corp.’s subsidiary, Heights Finance Holding Co., has been sued by U.S. Consumer Financial Protection Bureau ("CFPB") for allegedly pushing low-income borrowers to refinance short-term loans. The practice placed nearly 10,000 borrowers in continuous debt between 2013 and 2020.
The lawsuit, filed in federal court in Greenville, SC, stated that Heights Finance violated laws against unfair and abusive lending practices by churning loans through repeated refinancing.
Per CFPB, Heights Finance took advantage of struggling borrowers by not offering them alternatives to refinancing, which carried a fee each time.
CFPB director, Rohit Chopra, said that what the company “sold as a financial lifeline was, in reality, pushing customers into financial quicksand.”
The regulator has asked for an unspecified fine, refunds for harmed consumers and an order barring the company from violating the law.
However, CURO has denied the allegations and will likely defend its business practices in a vigorous manner.
In a statement, CURO mentioned that the small loans in consideration were originated by subsidiaries of Heights Finance before it was acquired by the company in late 2021 from private equity firm Milestone Partners.
Shares of CURO have lost 63.8% over the past six months compared with the industry’s decline of 6.2%.
Bank of America (BAC - Free Report) has been hit with substantial financial penalties that amount to $250 million. This includes $100 million in customer reimbursements and $150 million in fines due to a trio of unsavory practices involving overdraft fees, withholding credit card rewards and opening unauthorized accounts.
CFPB and Office of the Comptroller of the Currency ("OCC") levied this colossal fine after BAC's actions were deemed illegal and a detriment to customer trust. The bank must refund $100 million to affected customers and pay $90 million to CFPB and $60 million to OCC.
Wells Fargo & Company (WFC - Free Report) agreed to pay $1 billion related to a lawsuit accusing it of overstating the progress on resolving its 2016 fake account scandal and thereby defrauding shareholders. Since 2018, WFC has been under consent orders from the Federal Reserve and two other financial regulators to improve its governance and oversight.
However, shareholders alleged that Wells Fargo and its past management misinformed them about how swiftly the company was addressing governance issues and risk-management systems due to which the bank opened millions of fake accounts. Accordingly, when these shortcomings surfaced, WFC's market value fell by more than $54 billion over two years ending in March 2020.
However, Wells Fargo denied any wrongdoing and decided to settle to eliminate further litigation expenses.
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CURO Subsidiary Sued for Misleading Consumer Loan Borrowers
CURO Group Holdings Corp.’s subsidiary, Heights Finance Holding Co., has been sued by U.S. Consumer Financial Protection Bureau ("CFPB") for allegedly pushing low-income borrowers to refinance short-term loans. The practice placed nearly 10,000 borrowers in continuous debt between 2013 and 2020.
The lawsuit, filed in federal court in Greenville, SC, stated that Heights Finance violated laws against unfair and abusive lending practices by churning loans through repeated refinancing.
Per CFPB, Heights Finance took advantage of struggling borrowers by not offering them alternatives to refinancing, which carried a fee each time.
CFPB director, Rohit Chopra, said that what the company “sold as a financial lifeline was, in reality, pushing customers into financial quicksand.”
The regulator has asked for an unspecified fine, refunds for harmed consumers and an order barring the company from violating the law.
However, CURO has denied the allegations and will likely defend its business practices in a vigorous manner.
In a statement, CURO mentioned that the small loans in consideration were originated by subsidiaries of Heights Finance before it was acquired by the company in late 2021 from private equity firm Milestone Partners.
Shares of CURO have lost 63.8% over the past six months compared with the industry’s decline of 6.2%.
Image Source: Zacks Investment Research
Currently, CURO carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Legal Hassles Faced by Other Finance Firms
Bank of America (BAC - Free Report) has been hit with substantial financial penalties that amount to $250 million. This includes $100 million in customer reimbursements and $150 million in fines due to a trio of unsavory practices involving overdraft fees, withholding credit card rewards and opening unauthorized accounts.
CFPB and Office of the Comptroller of the Currency ("OCC") levied this colossal fine after BAC's actions were deemed illegal and a detriment to customer trust. The bank must refund $100 million to affected customers and pay $90 million to CFPB and $60 million to OCC.
Wells Fargo & Company (WFC - Free Report) agreed to pay $1 billion related to a lawsuit accusing it of overstating the progress on resolving its 2016 fake account scandal and thereby defrauding shareholders. Since 2018, WFC has been under consent orders from the Federal Reserve and two other financial regulators to improve its governance and oversight.
However, shareholders alleged that Wells Fargo and its past management misinformed them about how swiftly the company was addressing governance issues and risk-management systems due to which the bank opened millions of fake accounts. Accordingly, when these shortcomings surfaced, WFC's market value fell by more than $54 billion over two years ending in March 2020.
However, Wells Fargo denied any wrongdoing and decided to settle to eliminate further litigation expenses.