U.S. News

U.S. consumer watchdog slashes fine in payday lender settlement

WASHINGTON (Reuters) - The U.S. consumer finance watchdog ordered an Alabama-based payday lender on Thursday to return $500,000 to borrowers who were overcharged, a fine that people familiar with the matter said was only a third of what the prior Obama-era head of the agency had sought.

The settlement between Triton Management Group Inc and the Consumer Financial Protection Bureau (CFPB) was signed by Mick Mulvaney, who President Donald Trump named in November as the agency’s interim director.

Mulvaney’s predecessor, Richard Cordray, a Democrat who was appointed by President Barack Obama, had decided Triton’s customers were owed about $1.5 million and he wanted that money returned, according to three sources with direct knowledge of the matter.

The consent order, which the CFPB posted on its website, said the agency entered a judgment of $1.5 million against Triton, but the actual payback to borrowers was reduced to $500,000 because Triton did not have the funds.

An attorney for Triton, Allen Denson, said the lender was happy with the settlement that “put the bureau’s investigation behind it.”

The settlement is at least the third time that Mulvaney has dropped or reduced consumer payouts from cases under his review.

Triton Management, which operates about 100 storefront lending offices across the South, routinely overcharged borrowers in Mississippi, the CFPB said.

Customers who went in to borrow a few hundred dollars for about a month could end up paying more than twice that sum if they extended the life of the loan.

Triton did not disclose the true costs to borrowers, the CFPB concluded.

Reporting by Patrick Rucker; Editing by Leslie Adler and Chris Reese