Enova International, Inc., a publicly-traded, online lender that markets payday and installment loans, announced this week that it has reached an agreement with the Consumer Financial Protection Bureau to address payment processing issues.
Enova entered into a consent order that includes changes to its internal process and policies. Although the CFPB has determined that no customer restitution is required, Enova has agreed to a $3.2 million civil money penalty.
Enova allegedly violated the Consumer Financial Protection Act by debiting consumers’ bank accounts without authorization. The bureau found also that Enova failed to honor loan extensions it granted to consumers.
According to the complaint, Enova purchased consumer loan applications from lead generators as a part of its business. Sometimes, leads purchased would include loan applications from people who were already Enova customers. However, at times the new applications had bank account information different from the account information that Enova had on its existing loans. Enova would debit these other accounts to cover payments for the existing loans despite having no authorization to do so, the bureau said.
“Enova extracted millions of dollars in unauthorized debits from consumers’ accounts,” the bureau said in the consent order. “As a result, consumers experienced or were likely to experience unexpectedly low or negative balances. Enova also made unsuccessful attempts to debit consumers’ accounts, which resulted in consumers being charged insufficient funds fees and other bank fees.”
The agreement between Enova and the CFPB covers two payment processing issues that, combined, impacted less than 0.2% of total payments processed by Enova during the period in which the errors occurred. Enova identified the issues and disclosed them itself to the Bureau in 2014.
The issues arose from technical systems errors, all of which have since been corrected, and customers were contacted for remediation of damages they may have incurred. Under the terms of the consent order, Enova is barred from making or initiating electronic fund transfers without valid authorization.
“Any errors in our systems, especially those that impact our customers, are taken very seriously by our team, and we have invested in technology and processes to ensure appropriate resolution of such errors,” said Sean Rahilly, chief compliance officer and general counsel at Enova. “In this case, we self-reported these issues regarding our payment processes to the CFPB in 2014, so that we could work constructively with the bureau to ensure continuous improvement.”