On August 14, the Consumer Financial Protection Bureau, along with the Office of the Arkansas Attorney General, filed a proposed settlement with Andrew Gamber, Voyager Financial, and SoBell (collectively “Defendants”). This settlement follows a complaint the CFPB and Arkansas filed against Defendants in the United States District Court for the Eastern District of Arkansas, alleging violations of the Consumer Financial Protection Act and its state law equivalent, in connection with Defendants’ brokering of contracts offering high-interest credit to consumers, most of whom were veterans.
The CFPB and Arkansas alleged that under Defendants’ scheme, contracts were established between consumers and investors whereby consumers received lump-sum payments. In exchange, these consumers were obligated to repay a much larger amount by assigning to investors part of their monthly pension or disability payments for five to ten years. Most of the consumers were veterans with disability pensions from the Department of Veterans Affairs or pensions administered by the Defense Finance and Accounting Service. Under the scheme, veterans were required to go into their VA or DFAS online portals and change their entire pension direct-deposits or their monthly allotments to be routed directly into a bank account controlled by Defendants or their agents.
The CFPB and Arkansas argued that the contracts were invalid and not enforceable because federal law prohibits agreements under which another person acquires the right to receive a veteran’s pension payments. Additionally, Defendants represented to the consumers that these were not high-interest credit offers, specifically informing them in sales materials that “[i]t is important to note that this is not a loan” but then failing to disclose the interest rates. Further, Defendants misrepresented to consumers when they would receive their funds.
Under the proposed settlement, Defendants will be permanently banned from the industry, including engagement in brokering, offering, or arranging agreements between pension recipients and third parties under which the consumer would purport to sell a future right to an income stream from the consumer’s pension. In addition, the settlement requires redress of $2.7 million, a civil monetary penalty of $1 to the CFPB, and a payment of $75,000 to the Arkansas AG’s Office. The stipulated final judgment and order setting forth settlement terms awaits entry by the Court.