RSSThe Consumer Financial Protection Bureau filed a lawsuit in federal district court in the District of South Carolina against Candy Kern-Fuller, Howard Sutter III, and Upstate Law Group LLC.
The agency was joined by the South Carolina Department of Consumer Affairs and Arkansas Attorney General Leslie Rutledge, with whom it partnered on the investigation.
The bureau alleges that the defendants worked with a series of companies that brokered contracts offering high-interest credit to consumers, primarily disabled veterans, and violated the Consumer Financial Protection Act’s prohibition against deceptive acts or practices and against providing substantial assistance to deceptive and unfair acts or practices of others.
This action builds on a number of recent CFPB actions against other entities that used similar contracts and similar marketing tactics in offering high-interest credit to veterans. In January 2019, the bureau settled with Mark Corbett. In August 2019, in partnership with Arkansas, it settled with Andrew Gamber, Voyager Financial Group, BAIC, and SoBell Corp. In October 2019, in partnership with South Carolina, the bureau filed a lawsuit against Katharine Snyder and her companies, Performance Arbitrage Company, Inc., and Life Funding Options, Inc.
Corbett worked with both Gamber and Snyder, and their respective companies, to broker contracts offering high-interest credit, the bureau said.
In each of these actions, the CFPB alleged that these contracts violate laws that prohibit these transactions and render them void, contrary to the representations made by the defendants that the transactions were valid and enforceable.
In these actions, the bureau also alleged that the companies misrepresented to consumers that their products were a sale of payments and not a high-interest credit offer and failed to inform consumers of the products’ interest rates. To date, the bureau’s Civil Penalty Fund has allocated about $9 million to consumers harmed by Corbett’s actions and about $2.7 million to those harmed by Gamber’s actions.
The suit against Kern-Fuller, Sutter and Upstate alleges that the defendants assisted Gamber, Snyder, and their companies. The defendants provided substantial assistance to the companies’ deceptive and unfair acts or practices through a number of actions, the bureau said. They developed a pre-approval or risk-assessment process for the contracts and conducted underwriting. They approved or denied consumers’ applications to enter into the transactions as well as directing and administering the execution of the contracts. They processed payments for both the initial lump-sum payment and fees and other ongoing payments.
In addition, the bureau alleges that the defendants provided substantial assistance to deceptive misrepresentations by Gamber’s and Snyder’s companies to consumers that consumers may be subject to criminal prosecution if they breached their contacts when, in fact, the consumers could not be criminally prosecuted for doing so.
The bureau also alleges that the defendants committed deceptive acts or practices by collecting on the contracts brokered by the companies, including by filing suit when consumers failed to make payments and representing that consumers were legally obligated to make payments in accordance with the terms of their contracts when, in fact, the contracts are void from inception and consumers are not obligated to make payments.
The complaint seeks an injunction, redress to consumers, and the imposition of civil money penalties.
