On December 20, the Consumer Financial Protection Bureau executed a consent order with Military Credit Services, LLC, whereby the lender was required to pay a $200,000 civil monetary penalty, implement certain compliance measures, and hire an independent consultant to review the company’s compliance with federal laws. The order arose out of Military Credit Services’ alleged violations of the Electronic Funds Transfer Act, the Truth in Lending Act (“TILA”), and the Consumer Financial Protection Act (“CFPA”).
In the consent order, in which Military Credit Services did not admit or deny the allegations, the Bureau alleged that the lender violated an earlier consent order with the Bureau whereby Military Credit Services was required to change its “ACH Pre-Authorization Payments Agreement” with consumers to comply with the EFTA. Specifically, the insufficient agreement stated that consumers allowed Military Credit Services to automatically withdraw loan repayments and that “[p]ayments must be drafted on or before the contractual due date and may be subject to a $25.00 service charge for all non-sufficient funds.” The Bureau alleged that Military Credit Services violated the EFTA by “merely” stating “that the transfer will be made ‘on or before the contractual due date’ and not disclosing “requisite information to consumers,” which the Bureau contends is the actual date on which the transfers would be made.
The Bureau alleged that Military Credit Services violated TILA and Reg Z because the lender’s disclosures only stated the maximum annual percentage rate (APR) rather than the actual APR, and the disclosure was not in the required 16-point typeface.
This consent order reveals that the Bureau will continue to monitor compliance with its consent orders and is instructive to lenders and payment processors to make sure that the ACH withdrawal agreements comply with the EFTA and that lenders comply with TILA with respect to APR disclosures.