RSSThe Consumer Financial Protection Bureau filed an enforcement action this week against Top Notch Funding, a New Jersey-based loan broker that targeted its offers at consumers who were awaiting payment from settlements in legal cases or from victim-compensation funds.
These consumers included former National Football League players suffering from neurological disorders, victims of the Deepwater Horizon oil-rig disaster, and 9/11 first responders. The bureau alleges that Top Notch engaged in deceptive acts and practices, in violation of the Dodd-Frank Act.
The CFPB claims that Top Notch represented itself to consumers as a lender that could offer loans, when in fact it was only a broker, taking commissions when loan offers were eventually signed. Also, Top Notch advertised that the company had attorneys and accountants on staff and offices in all 50 states. In fact, the company had no offices anywhere and no attorneys or accountants on its staff at all.
Further, the bureau alleges that Top Notch lied to consumers about the loans it brokered. Top Notch told consumers that they could obtain loans with a low “2 percent Annual Percentage Rate” or “1 percent interest rate.” But every loan that Top Notch brokered was significantly more expensive. A typical loan that Top Notch brokered, according to the CFPB, carried a rate greater than 20 percent. Also, Top Notch told consumers they could receive loan funds in as little as an hour. But when Top Notch did successfully broker a loan, funds were never available in such a short time period and typically took weeks to be disbursed to consumers.
“It is reprehensible that Top Notch and its owner sought to scam NFL concussion victims, 9/11 heroes, and others to turn a quick profit,” said CFPB Director Richard Cordray. “We allege that this company, its owner, and its associate misled vulnerable consumers by lying about the terms of the deals they offered. Our proposed order seeks to knock these parties out of this business altogether, and impose penalties on them.”
The CFPB’s consent order would require Top Notch to immediately stop brokering loans. In addition, the company and its owner would be required to jointly pay a $60,000 civil penalty to the CFPB’s Civil Penalty Fund, and the owner individually to pay $10,000. Both fines would go into the CFPB’s Civil Penalty Fund. The bureau notes that these penalties take into account defendants’ inability to pay more.
