An online lead aggregator for payday and installment loans agreed to pay $4 million to settle a lawsuit filed by the Consumer Financial Protection Bureau. The lead aggregator also agreed to a permanent ban on lead generation, lead aggregation, and data brokering for certain high interest consumer loans.
In 2015, the CFPB filed a lawsuit against D and D Marketing, Inc. d/b/a T3 Leads (“T3”) in the United States District Court for the Central District of California, Western Division, asserting that T3 violated the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531, 5536(a), 5564, and 5565, by engaging in unfair and abusive conduct. The lawsuit alleged that T3 – which served as the middle man between lead generators and lead purchasers – failed to vet and monitor how the lead generators obtain and use consumer data in connection with high interest payday and installment loans.
The CFPB asserted that T3’s lead generators incorrectly represented themselves as lenders or falsely suggested that the lenders connected to the consumer via T3 met certain standards or would offer consumers the best rates or lowest fees. However, according to the CFPB, many of T3’s lenders (the lead purchasers) were organized by Indian tribes and/or under the laws of foreign jurisdictions (offshore lenders) and thus were not subject to state laws or regulations. The CFPB alleged that T3 knew or should have known of the risk that these alleged bad actors posed to consumers in purchasing and selling leads.
To settle the lawsuit, T3 entered a Stipulated Final Judgment and Order, agreeing to pay $1 million to a fund for injured consumers and $3 million to the CFPB. T3 also agreed to never act as a lead generator, lead aggregator, or data broker for certain high interest (over 36% annual percentage rate) loans. Finally, T3 agreed not to disclose, use, or benefit from customer information obtained on or before March 28, 2019 in connection with the receipt of leads or sale of leads. T3 denied any liability in entering the Order.