Category: CFPB


Subprime Lender Enova fined $15MM by CFPB for “widespread illegal conduct”

Enova International: Examining Regulatory Compliance and Industry Impact


In the competitive world of fintech, compliance with regulatory standards is pivotal in establishing trust and maintaining operational integrity.

The recent developments involving Enova International and the Consumer Financial Protection Bureau (CFPB) highlight the complexities and consequences of regulatory adherence in the financial technology sector.

Enova’s Regulatory Challenge:

A $15 Million Settlement with CFPB

Enova International, a renowned online lender, recently faced significant regulatory scrutiny.

The CFPB imposed a $15 million penalty on Enova for engaging in practices deemed illegal.

These actions included unauthorized withdrawals from customers’ bank accounts, deceptive statements regarding loans, and the cancellation of loan extensions.

This penalty is not Enova’s first encounter with regulatory challenges; in 2019, they settled with the CFPB for $3.2 million for similar violations.

Industry Implications of Enova’s Regulatory Non-Compliance

Enova’s situation is a stark reminder of the importance of regulatory compliance in the fintech industry.

The repercussions extend beyond financial penalties to include reputational damage, operational restrictions, and the potential loss of consumer trust.

For Enova, this meant a ban on offering certain consumer loans and the necessity to link executive pay to regulatory compliance.

The case also underscores the CFPB’s ongoing focus on subprime lenders.

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Addressing the Challenges:

Enova’s Response and Future Steps

In response to the CFPB’s order, Enova acknowledged the issues, attributing them to unintentional technical and processing errors, which the company claims to have rectified.

Enova’s president of consumer lending emphasized the company’s commitment to fair customer treatment and the enhancement of business practices to minimize errors and address issues promptly.

The Broader Context: Fintech Compliance and Consumer Protection

The Enova case is emblematic of broader challenges facing the fintech industry.

As technology evolves, so do the risks and complexities associated with financial transactions and data security.

Regulatory bodies like the CFPB play a crucial role in ensuring that fintech companies operate within legal boundaries and prioritize consumer protection.


The Enova-CFPB settlement is a significant event in the fintech landscape.

It highlights the need for stringent regulatory compliance and ethical business practices.

As the industry grows, companies must navigate the regulatory environment carefully to ensure longevity and maintain consumer trust.


CFPB: Big Win for Consumers & Lenders – Mandatory Underwriting Provisions Rescinded!


WASHINGTON, D.C. – The Consumer Financial Protection Bureau today issued a final rule concerning small-dollar lending in order to maintain consumer access to credit and competition in the marketplace. The final rule rescinds the mandatory underwriting provisions of the 2017 rule after re-evaluating the legal and evidentiary bases for these provisions and finding them to be insufficient. The final rule does not rescind or alter the payments provisions of the 2017 rule.

Consumers utilizing small-dollar loans continue to have robust consumer protections in place under the prohibition on unfair, deceptive, and abusive acts or practices in the Dodd-Frank Act, the payments provisions of the 2017 rule, and other provisions of federal and state law. Consumers also have increasingly innovative choices among competing small-dollar products in the marketplace.

Rescinding the mandatory underwriting provisions of the 2017 rule ensures that consumers have access to credit and competition in states that have decided to allow their residents to use such products, subject to state law limitations. Currently, 32 states allow small-dollar lending. Many of these states set maximum interest rates for small-dollar loans or impose other restrictions or limitations on their use. As noted above, the Bureau adopted today’s rule because of the insufficient legal and evidentiary bases for the 2017 rule’s mandatory underwriting provisions, but also notes that today’s action will help to ensure the continued availability of small-dollar lending products for consumers who demand them, including those who may have a particular need for such products as a result of the current pandemic.

The CFPB is committed to ensuring that consumers can make the best-informed choices among the small-dollar products available to them. To assist in achieving this objective, the Bureau announced today that it will undertake new research focusing on identifying information that could be disclosed to consumers during the small-dollar lending process to allow them to make the most informed choices.

“A vibrant and well-functioning financial marketplace is important for consumers to access the financial products they need and ensure they are protected. Our actions today ensure that consumers have access to credit from a competitive marketplace, have the best information to make informed financial decisions, and retain key protections without hindering that access,” said CFPB Director Kathleen L. Kraninger. “The Bureau protects consumers from unfair, deceptive, or abusive practices and takes action against companies that break the law. We will continue to monitor the small-dollar lending industry and enforce the law against bad actors.”

With its actions today, the Bureau is moving forward with implementing the payments provisions of the 2017 final rule. These provisions prohibit lenders from making a new attempt to withdraw funds from an account where two consecutive attempts have failed unless consumers consent to further withdrawals. The payment provisions also require such lenders to provide consumers with written notice before making their first attempt to withdraw payment from their accounts and before subsequent attempts that involve different dates, amounts, or payment channels. These provisions are intended to increase consumer protections from harm associated with lenders’ payment practices.

The Bureau received a petition to commence a rulemaking to exclude debit and prepaid cards from the payments provisions of the small-dollar lending rule, and the agency today denied that petition. The Bureau also today issued guidance clarifying the payments provisions’ scope and assisting lenders in complying with those provisions. In addition, today the Bureau released ratification of the payment provisions in light of the Supreme Court’s recent decision in Seila Law. Although the payments provisions are currently stayed by court order, the Bureau will seek to have them go into effect with a reasonable period for entities to come into compliance.

To further robust competition in the small-dollar lending space and increase access to credit, in May the Bureau issued a no-action letter (NAL) template that insured depository institutions and credit unions could use to apply for a NAL covering small-dollar credit products. The NAL template includes important consumer guardrails that must be included in any product covered by such a NAL. The Bureau issued a revised NAL Policy in September 2019 and has issued a NAL Template and two NALs under the revised Policy designed to facilitate the provision of housing counseling services.

The final rule can be viewed here:

The ratification of the payment provisions can be viewed here:

July 7, 2020

Office of Communications
Tel: (202) 435-7170


Single Director Structure of Dodd-Frank Act Held to be Unconstitutional

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GREAT NEWS for Our Industry!


Single Director Structure of Dodd-Frank Act Held to be Unconstitutional

Today the U.S. Supreme Court announced its decision in Seila Law, LLC vs. CFPB, a case in which a private party challenged the issuance by the Consumer Financial Protection Bureau (CFPB) of a Civil Investigative Demand (CID) on the basis that the structure of the CFPB, as created by Congress in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) violates the Constitution’s separation of powers principle.

Seila Law argued that the CFPB’s structure is unconstitutional because the CFPB Director is removable only “for cause” and not at the will of the president. In issuing its ruling today, the Supreme Court agreed with Seila Law. It held that the structure of the CFPB is unconstitutional to the extent that the position of CFPB Director could not be removed other than for cause.

Further, the Supreme Court determined that Dodd-Frank’s provision that addressed the removal of the Director was severable from the balance of the Act. Finally, the Court ruled that upon striking this provision, the Director of the CFPB may now be removed by the president at will, but that the balance of the Act may stand. A pertinent excerpt of the Court’s ruling is here:

The President’s power to remove—and thus supervise— those who wield executive power on his behalf follows from the text of Article II, was settled by the First Congress and was confirmed in the landmark decision Myers v. United States, 272 U. S. 52 (1926). Our precedents have recognized only two exceptions to the President’s unrestricted removal power. In Humphrey’s Executor v. United States, 295 U. S. 602 (1935), we held that Congress could create expert agencies led by a group of principal officers removable by the President only for good cause.

While we need not and do not revisit our prior decisions allowing certain limitations on the President’s removal power, there are compelling reasons not to extend those precedents to the novel context of an independent agency led by a single Director.
Such an agency lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from Presidential control. We, therefore, hold that the structure of the CFPB violates the separation of powers. We go on to hold that the CFPB Director’s removal protection is severable from the other statutory provisions bearing on the CFPB’s authority. The agency may, therefore, continue to operate, but its Director, in light of our decision, must be removable by the President at will.

The full opinion is here:

Today’s decision ends a multi-year challenge to the Dodd-Frank Act, and it has significant implications for Congress in that it changes the ability of the legislative branch to delegate certain executive branch functions.

It also impacts the way the executive branch controls independent agencies.

Most immediately, the decision has significant impacts on the CFPB and its current Director, Kathleen Kraninger, who was confirmed to the post in December of 2018, for a five-year term.

For our industry, today’s ruling may have an impact on the Small-Dollar Rule, which was initially promulgated in 2017, and for which the CFPB has proposed significant revisions. The revisions were anticipated in April of this year but have not yet been issued.

>We will be providing additional analysis with respect to today’s decision and its impact on our industry.

Thank you.
Ed D’Alessio
Executive Director

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