RSSThe Consumer Financial Protection Bureau has established supervisory authority over installment lender World Acceptance.
According to the CFPB, the Greenville, S.C.-based company has not adequately explained loan terms to many of its customers. More than 210 consumer complaints were reportedly filed against the company from Sept. 1, 2019, through Sept. 21, 2022.
The supervisory authority will allow the CFPB to review whether World Acceptance’s conduct deceives consumers into thinking the insurance is mandatory, regardless of contrary contractual language. “Of the most concern, consumers complain that World Acceptance hides within its loan agreements expensive and unwanted insurance products or that World Acceptance misleads consumers into believing that these unwanted insurance products are mandatory,” according to the Feb. 23 order.
According to the bureau, World Acceptance’s business model “relies on serially refinancing its loans, a practice that may harm consumers in a variety of ways.” The company allegedly harassed and embarrassed defaulted borrowers to collect on loans, including by contacting borrowers at their places of work or contacting their employers, even after being told not to. The company also allegedly disclosed consumers’ debts to their family members and friends to embarrass them into making payments.
“These complaints establish reasonable cause to determine that World Acceptance’s collections practices pose risks to consumers,” according to the CFPB. “Specifically, there is reasonable cause to determine that World Acceptance engages in excessive, harassing or coercive tactics to collect unpaid debts.”
In pushing back against being designated for supervision, World Acceptance cited three reasons: The complaints were not “materially different from other lenders”; the CFPB official should have considered the company’s “handling and resolution of complaints”; and that the agency’s Office of Enforcement previously investigated the company but later closed the case.
That referenced investigation was a civil investigative demand the CFPB filed in 2014 alleging the company tried to profit from repeat borrowers. The complaint was filed after a 2013 ProPublica report alleged that the company’s business model rested on convincing low-income consumers to become repeat borrowers. The CFPB dropped the case in 2018 under former Director Mick Mulvaney.
According to the CFPB, World Acceptance’s response to the complaints disregarded the relevant portion of the complaints, denied wrongdoing, or described relevant facts differently than consumers without providing sufficient evidence to resolve the dispute.
