U.S. consumer bureau probing firms that link borrowers, payday lenders
WASHINGTON, March 12
WASHINGTON, March 12 (Reuters) - The U.S. consumer watchdog is investigating companies that link cash-strapped wage earners to payday lenders, according to a document on the Consumer Financial Protection Bureau's (CFPB) website.
The bureau is looking into whether those firms "have engaged or are engaging in unlawful acts or practices in connection with the marketing, selling or collection of payday loans," according to the document, which was dated Feb. 18 and posted on the bureau's website on Wednesday.
The document was submitted by MoneyMutual, which connects borrowers to lenders and is known by many consumers for its television ads featuring the talk show host Montel Williams, after the CFPB requested information about the company.
It was not clear whether other firms received a "civil investigative demand" for documents as part of the CFPB probe.
A spokesman for the consumer bureau declined to comment. A spokesman for MoneyMutual, which is a subsidiary of digital marketing company Selling Source, did not immediately have a comment.
Regulators have been keeping a close eye on the payday loan industry, in which borrowers take out small loans that usually must be paid back when the consumer receives his or her next paycheck.
Consumer advocates say these high-interest loans can trap primarily low-income individuals in a cycle of mounting debt. They are concerned about online lenders in particular, which they say sometimes skirt state laws for payday loans.
Financial regulators hope to choke off the pipeline of borrowers to online lenders by going after firms that collect borrowers' information through their websites and pass it along to potential lenders.
On its website, MoneyMutual calls itself an "industry leader" in linking borrowers with small dollar loans and says more than one million people have used its services.
Benjamin Lawsky, the head of New York's Department of Financial Services, sent subpoenas last month to MoneyMutual and 15 other businesses in its industry.
The consumer bureau, which was created by the 2010 Dodd-Frank law and charged with protecting Americans from dangerous financial products, took its first enforcement action against a payday lender, Cash America International, in November.
The bureau also is considering writing new rules for the industry after it published a 2013 paper that highlighted problems including consumers' "sustained" reliance on small-dollar loans. (Reporting by Emily Stephenson; Editing by Alden Bentley)
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