The Consumer Financial Protection Bureau fined online lender Enova International $15 million for allegedly illegally withdrawing funds from customers’ bank accounts without permission.
The CFPB also banned the Chicago-based fintech from offering payday loans that must be repaid within 45 days for seven years, ordered Enova to provide redress to harmed consumers, and required the company to tie executive pay to their compliance with financial protection laws.
The order came nearly five years after the CFPB fined Enova $3.2 million in 2019 and ordered the fintech to cease illegal conduct for debiting consumers’ bank accounts without authorization. According to the CFPB, a subsequent investigation revealed that Enova violated the order by continuing to withdraw or trying to withdraw funds from consumer accounts without their express informed consent. The practice allegedly impacted more than 111,000 consumers.
Enova allegedly canceled loan extensions it had granted to some consumers and in most cases debited their bank accounts for the full loan payment instead of for only a smaller loan extension fee, which also violated the 2019 order.
“Enova failed to tell consumers who had been granted a loan extension that making an interim partial payment would result in cancellation of the loan extension and misrepresented the amount that Enova would charge to consumers who made such an interim partial payment,” the CFPB stated. “Enova also misrepresented the due date for certain loan payments, that consumers could skip certain loan payments, and the amounts due on certain loans.”
In a press release announcing the fine, Enova said the issues did not stem from a deliberate attempt to break the law but were instead from “unintentional technical systems and processing errors which have since been addressed.” Enova said it disagreed with the CFPB’s characterizations of the issue and had fully cooperated with the investigation.
President of Consumer Lending Ranning Li said the incidents cited in the CFPB report were only “a small fraction” of their customers and transactions.
“We take any errors in our systems very seriously, especially those that impact our customers, and will continue to invest in our technology, systems and compliance processes to prevent, identify and ensure appropriate resolution of errors,” Li added.