The Consumer Financial Protection Bureau issued a consent order against Omni Financial of Nevada, Inc., last week requiring the company to pay a $2.175 million civil money penalty. Omni Financial violated the Military Lending Act, Electronic Fund Transfer Act, and Consumer Financial Protection Act of 2010 in connection with making installment loans, the bureau said.
Las Vegas-based Omni primarily lends to consumers affiliated with the military, originating tens of thousands of loans each year which typically range from $500 to $10,000.
The Bureau found that, since October 2016, Omni’s loans to covered borrowers violated the MLA’s prohibition of requiring repayment by allotment. Run by the Department of Defense, the allotment system allows servicemembers to designate a portion of their paycheck to certain recipients.
In an EFTA violation, Omni required its borrowers to provide bank-account information and authorize Omni to withdraw funds from that account on the first business day after each missed payment, the bureau said. This violates EFTA’s prohibition against requiring consumers to preauthorize electronic fund transfers as a condition of receiving credit. These EFTA violations were also CFPA violations, the agency said.
In addition to prohibiting future violations, the consent order requires Omni to provide notice of the bureau’s findings to all customers repaying their loans by allotment, along with notice that they may change their repayment method. Omni also must provide training to employees and is prohibited from providing any incentives to employees or performance evaluations that consider the number or rate of consumers who choose to repay by allotment.
The CFPB action against Omni is part of ongoing efforts at the bureau to target MLA violations.
In addition to lending to active-duty servicemembers and their dependents, Omni lends to civilians and non-covered servicemembers, such as military retirees. It also operates using the names Omni Financial and Omni Military Loans.