In 2015, the CFPB took action against “online payday lender” Integrity Advance, LLC and its CEO, James R. Carnes, for “allegedly deceiving consumers about the cost of short-term loans.” The CFPB alleged Integrity Advance “did not disclose the costs consumers would pay” and “unfairly used remotely created checks” to charge customers’ “bank accounts even after the consumers revoked authorization for automatic withdrawals.” Carnes appealed the administrative lawsuit that sought “$38.1 million in restitution” and civil penalties against him, and this case is still listed as active.

• Integrity Advance, LLC is Newark, Delaware-based payday lender that operated online. At the time of this case, the company originated and serviced “short-term loans to consumers around the country.” Carnes is a businessman based out of the Mission Hills, Kansas. [Jeff Blumenthal, “CFPB charges Delaware-based online lender with deceiving consumers about loan costs,” Philadelphia Business Journal, 11/19/15; Dave Helling, “Campaign cash from payday loan industry under scrutiny in Missouri, Kansas races,” The Kansas City Star, 11/01/16]

• According to the CFPB, “the company offered loans ranging from $100 to $1,000, and consumers typically applied for the loans by entering their personal information into a lead generator website.” This process occurred from “May 2008 through December 2012.” [Jeff Blumenthal, “CFPB charges Delaware-based online lender with deceiving consumers about loan costs,” Philadelphia Business Journal, 11/19/15]

• The “administrative lawsuit” alleged “that the contracts of Integrity Advance, run by CEO James R. Carnes, did not disclose the costs consumers would pay under the default terms of the contracts.” Additionally, it alleged that the “company ‘unfairly used remotely created checks to debit consumers’ bank accounts even after the consumers revoked authorization for automatic withdrawals.'” The terms of Integrity Advance’s contract stated that “loans would roll over four times — causing additional charges to accrue with each time — before the company applied any of the payments to the principal amounts. But the costs on the disclosures were based on the assumption that the loans would not roll over and would instead be repaid in full by the first payment.” The company “never informed consumers of the total costs of their loans if they were rolled over, even though the contracts were set up to roll over automatically,” resulting in “$765 in finance charges for a typical $300 loan.” [Jeff Blumenthal, “CFPB charges Delaware-based online lender with deceiving consumers about loan costs,” Philadelphia Business Journal, 11/19/15]

• The company was also alleged to have “illegally forcing borrowers to agree to repay their loans through pre-authorized Automated Clearing House (ACH) payments. If a consumer canceled the authorization for ACH withdrawals, the lender would then use remotely created checks to continue debiting the account.” [Jeff Blumenthal, “CFPB charges Delaware-based online lender with deceiving consumers about loan costs,” Philadelphia Business Journal, 11/19/15]

• The CFPB sought “restitution for affected consumers, as well as a civil money penalty and injunctive relief.” In November 2016, it was reported that Carnes was an appealing a decision made by “an administrative law judge” that he pay “$38.1 million” in restitution to victims of the company’s scheme in addition to a “a $5.4 million civil penalty” to the CFPB. [Jeff Blumenthal, “CFPB charges Delaware-based online lender with deceiving consumers about loan costs,” Philadelphia Business Journal, 11/19/15; Dave Helling, “Campaign cash from payday loan industry under scrutiny in Missouri, Kansas races,” The Kansas City Star, 11/01/16; Steve Vockrodt, “Mission Hills payday lender James Carnes to appeal multimillion-dollar penalty,” The Kansas City Star, 10/11/16]