CFPB settles with Cottonwood Financial over loan marketing and collection claims
The CFPB said Cottonwood Financial will pay a $1.1 million civil money penalty and $286,675.64 in consumer redress under a settlement resolving alleged CFPA, FCRA and TILA violations.
The Consumer Financial Protection Bureau said it has settled with Cottonwood Financial, Ltd. over alleged violations tied to the company’s marketing, servicing and collection of payday loans, auto title loans and unsecured consumer installment loans.
Under the agreement, Cottonwood must pay a $1.1 million civil money penalty and $286,675.64 in consumer redress, and stop the practices that formed the basis of the alleged violations.
Cottonwood operates about 340 retail lending outlets in Idaho, Illinois, Michigan, New Mexico, Texas, Utah and Wisconsin under the name Cash Store, according to the source brief. The settlement covers alleged violations of the Consumer Financial Protection Act, the Fair Credit Reporting Act and the Truth in Lending Act.
The redress is described as restitution for the difference between the discount consumers actually received through a discount code tied to advertisements offering a 50% discount and the full amount of a 50% discount on finance charges.
The source brief does not provide additional detail on the CFPB’s findings or include a response from Cottonwood. It also does not give the exact date of the enforcement action beyond the publication date of the cited report.
What happens next is set out in the consent order: Cottonwood must pay the penalty and redress and is barred from continuing the challenged conduct.
Sources
Editorial note: This article was prepared with AI assistance and includes source attribution for reader review.
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