8/10/18 a federal district court in the Western District of Missouri entered an Order effectuating a settlement between the Bureau of Consumer Financial Protection (Bureau) and Richard Moseley, Sr., Richard Moseley, Jr., and 20 interrelated corporate entities controlled by Moseley, Sr. and Moseley, Jr., in the Bureau’s lawsuit regarding the unlawful origination and servicing of short-term, small-dollar online loans to consumers nationwide.
The Bureau’s Complaint alleged violations of the Consumer Financial Protection Act and other federal consumer financial laws. The Bureau alleged that the defendants obtained consumers’ sensitive personal and financial information from third-party data brokers, and used that information to access consumers’ bank accounts without authorization. According to the Bureau’s complaint, the Hydra Group deposited loans in consumers’ bank accounts, then debited biweekly “finance charges” indefinitely. In many cases, the Bureau alleged, consumers never saw loan agreements and were not aware of the account activity until after the loan was deposited and finance charges were withdrawn. Additionally, the Bureau alleged that, even when consumers did receive loan documents, the written disclosures misrepresented the price terms and repayment obligations of the purported loan.
In November 2017, a jury in New York found Moseley, Sr. guilty of: conspiracy to collect unlawful debts; collection of unlawful debts; conspiracy to commit wire fraud; wire fraud; aggravated identity theft; and making false disclosures under the Truth in Lending Act. Moseley, Sr. has appealed that conviction.
Under the terms of the consent order, the defendants will be banned from the industry, forfeit approximately $14 million in assets, and pay a $1 civil money penalty. The civil penalty amount is based in part on the defendants’ limited ability to pay. The order imposes a judgment for $69 million for purposes of paying consumer redress, but, in light of the defendants’ limited ability to pay, the judgment will be suspended upon compliance with other requirements.
The consent order is available at: https://files.consumerfinance.gov/f/documents/bcfp_hydra_stipulated-final-judgment-order_2018-08.pdf