Top Story Lending Related

The Federal Trade Commission has announced that, as a result of a Federal Trade Commission lawsuit, the owners and operators of a sprawling credit repair operation known as Financial Education Services (FES) will end the practices that the FTC alleged created a pyramid scheme and also violated the Credit Repair Organizations Act. In addition, the proposed court orders [see Case Timeline HERE] include substantial monetary penalties.

The FTC first filed suit against the FES scheme in May 2022, alleging that the company preyed on consumers with low credit scores by luring them in with the false promise of an easy fix and then recruiting them to join a pyramid scheme selling the credit repair services to others, costing them millions of dollars.

The proposed settlements in the case will lead to more than $12 million being turned over to the FTC for use in providing refunds to affected consumers, as well as conduct prohibitions against the defendants.

The FDIC has issued a list of 54 state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA).

One of the banks — Farmers Bank & Trust, Great Bend, Kansas, received a rating of "needs to improve." Fifty-one banks received ratings of "satisfactory." We congratulate two banks — Stock Yards Bank & Trust Company, Louisville, Kentucky, and First Federal Bank of Kansas City, Lees Summit, Missouri — on their "outstanding" ratings.

The OCC has released a list of 27 Community Reinvestment Act performance evaluations that became public during July 2024. Of the 27 evaluations, one is rated substantial noncompliance, 20 are rated satisfactory, and six are rated outstanding.

The Lemont National Bank, Lemont, Illinois, received the substantial noncompliance rating.

Outstanding ratings were awarded to—

• Black Hills Community Bank, National Association, Rapid City, South Dakota
• Eastern Savings Bank, FSB, Hunt Valley, Maryland
• First National Bank, Fort Pierre, South Dakota
• Home Savings and Loan Association of Carroll County, F.A., Norborne, Missouri
• Queensborough National Bank & Trust Company, Louisville, Georgia
• Sterling Federal Bank, F.S.B., Sterling, Illinois

The NCUA yesterday reported it issue2 two prohibition orders in July barring individuals from participating in the affairs of any federally insured depository institution. The orders were issued to:

• Jose Prado-Valero, a former employee of Financial Center First Credit Union in Indianapolis, Indiana, after finding that he engaged in an elaborate fraud to share credit union members’ personal information with non-members who fraudulently withdrew members’ funds, in exchange for a portion of the proceeds of the fraud. Valero pleaded guilty to a one-count information in federal court in April 2024.
• Tracy H. Thibodeau, a former employee of Vermont VA Federal Credit Union in White River Junction, Vermont, after finding that, as a branch manager of the credit union, she fraudulently obtained a personal Vermont VA FCU credit card and exempted herself from credit limits, late fees, interest payments, and making minimum monthly payments, defrauding the credit union of $137,170. She subsequently pleaded guilty to a charge of bank fraud in federal court.

FDIC FIL-50-2024, issued yesterday, lists steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Missouri affected by severe storms, straight-line winds, and flooding from May 19 to May 27, 2024.

FIL-51-2024, also issued yesterday, lists steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Kentucky affected by severe storms, straight-line winds, tornadoes, landslides, and mudslides from May 21 to May 27, 2024.

A notice was posted yesterday on the Department of Defense's Military Lending Act (MLA) website announcing a scheduled update to version 5.21 is scheduled for Thursday, August 8, 2024. Due to the update, the MLA website will not be available from 6:00 p.m. until 9:00 p.m. PDT (9:00 p.m. until midnight EDT) on August 8.

The second 2024 issue of Consumer Compliance Outlook has been released by the Federal Reserve, with a focus on consumer complaints. The issue includes these articles:

• The Benefits of a Formal Complaint Management Program
• Consumer Complaints 2023: A Review of Federal Reserve Data
• Enhancing the Compliance Management Program with Complaint Data

The Federal Housing Finance Agency has announced that U.S. house prices were unchanged in May, according to the FHFA's seasonally adjusted monthly House Price Index (HPI). House prices rose 5.7 percent from May 2023 to May 2024. The previously reported 0.2 percent price increase in April was revised upward to 0.3 percent.

For the nine census divisions, seasonally adjusted monthly price changes from April 2024 to May 2024 ranged from -0.5 percent in the West North Central division to +0.3 percent in the New England division. The 12-month changes were all positive, ranging from +2.4 percent in the West South Central division to +9.2 percent in the New England division.

The FDIC has released a list of enforcement orders and notices it issued in June 2024. Among those orders are four prohibition orders; one combined prohibition order and order to pay a civil money penalty (CMP); and one CMP order. The first Notice seeks a prohibition order; the second Notice seeks a prohibition order and assessment of a CMP.

• A Notice of Charges and Hearing seeking a civil money penalty and prohibition order against Elias Israel Robiero Rangel, now or formerly affiliated with Truist Bank, Charlotte, NC
• A Notice of Charges and Hearing for a prohibition order against Martin Fernandez Jr., now or formerly affiliated with International Bank of Commerce, Laredo, TX
• An order for assessment of a $15,000 CMP and prohibition against Toni Miller, formerly affiliated with South State Bank, Columbia, SC
• An order assessing a CMP of $7,000 against Mohammed A. Kasem, now or formerly affiliated with Truist Bank, Charlotte, NC
• An order of prohibition against Joshua E. Breedwell, formerly affiliates with Discover Bank, Greenwood, DE
• An order of prohibition against Brady D. Torgerson, formerly affiliated with The Union Bank, Beulah, ND, and First Security Bank, West Beulah, ND
• An order of prohibition against Mitchell A. Fowler, formerly affiliated with Sunmark Community Bank, Perry, GA

The CFPB on Friday announced it has sued Acima Holdings, LLC, Acima Digital, LLC (subsidiaries of Rent-a-Center (now known as Upbound Group, Inc.), and collectively, "Acima"), and Acima's founder and former CEO, Aaron Allred for illegal lending activities in connection with as many as five million consumer financing agreements.

The CFPB alleges Acima used deceptive dark patterns and other tricks to trap consumers in high-cost credit agreements to finance the purchase of household goods. Acima sought to disguise many of these credit agreements as leases to evade consumer financial protection laws. Due to Acima’s deception and obstruction, many consumers did not understand they were agreeing to expensive markups, exorbitant finance charges, and having few ways to escape their contracts. The CFPB is asking that the court order the defendants to forfeit the illegally obtained profits, give refunds to consumers, and halt their misconduct.

The CFPB’s lawsuit alleges Acima violated the Consumer Financial Protection Act, Truth in Lending Act, Fair Credit Reporting Act, and Electronic Fund Transfer Act. Specifically, the CFPB alleges Acima has misled and harmed consumers through:

• False marketing
• Deceptive digital dark patterns
• Trapping borrowers
• Widespread credit reporting failures