Signage is seen at the Consumer Financial Protection Bureau (CFPB) headquarters in Washington, D.C., U.S., May 14, 2021. REUTERS/Andrew Kelly/File Photo Acquire Licensing Rights
Aug 22 (Reuters) – A U.S. consumer finance regulator sued a subsidiary of fintech lender Curo Group Holdings Corp. (CURO.N) on Tuesday, alleging it pushed struggling borrowers to refinance short-term loans to keep them in debt and reap fees.
The U.S. Consumer Financial Protection Bureau (CFPB) said in the lawsuit filed in federal court in Greenville, South Carolina, that Heights Finance Holding Co. violated laws against unfair and abusive lending practices by “churning” loans through repeated refinancing, putting around 10,000 borrowers in continuous debt from 2013 to at least 2020.
The agency sought an unspecified fine, refunds for harmed consumers, and an order barring the company from violating the law.
CFPB Director Rohit Chopra said that what the company “sold as a financial lifeline was, in reality, pushing customers into financial quicksand.”
A spokesperson for Curo did not immediately reply to a request for comment.
Curo acquired Heights Finance for $360 million in late 2021 from private equity firm Milestone Partners.
The CFPB said that Heights Finance, which operates in Texas, Oklahoma, Alabama, Georgia, Tennessee, and South Carolina, took advantage of low income borrowers by not offering alternatives to refinancing, which carried a fee each time.
The company incentivised employees to persuade delinquent borrowers to refinance or pay past due balances immediately, the CFPB said, citing emails from supervisors.
“Team look at the accounts that are begging for help. They are past due and are screaming they don’t have the money to pay you so get to work selling them the benefits,” a supervisor wrote in one email, according to the complaint.
“If they don’t want to refi then ask for your money don’t give an extra week or two don’t let it be their option!” the email read.
The agency said Heights Finance generated 40% of its net revenue from repeated refinances.
Curo stock was trading at around $1.13 in the early afternoon on Tuesday, down around 5% from Monday’s closing price of $1.19 per share.
The case is CFPB v. Heights Finance Holding Co. et al., No. , U.S. District Court, District of South Carolina.
Reporting by Jody Godoy in New York
Editing by Mark Potter
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