CFPB Pays $384 Million to Victims of Think Finance Scheme

Eleven years ago, Think Finance was named one of Forbes’ most promising companies.

Now, the online lender is bankrupt, with the Consumer Finance Protection Bureau (CFPB) saying it defrauded hundreds of thousands of consumers.

The bureau on Tuesday (May 14) announced it had distributed more than $384 million from its victims relief fund to about 191,000 consumers who, according to the CFPB, were tricked by Think Finance into repaying loans they did not owe.

“Too often, victims of financial crimes are left without recourse even when the companies that harm them are stopped by law enforcement,” CFPB Director Rohit Chopra said in a news release. “The victims relief fund allows the CFPB to help consumers even when bad actors have squandered their ill-gotten profits.”

The CFPB sued Think Finance in 2017, alleging the company had tricked consumers into making payments on loans they didn’t owe. The suit said the company — which folded in 2019 — illegally collected on loans that were void under state laws governing interest rate caps and lender licensing rules.

According to the CFPB, Think misrepresented to consumers that they owed money, made electronic withdrawals from their bank accounts, and sent letters demanding payment.

“The CFPB’s victims relief fund’s $384 million distribution to consumers harmed by Think Finance is a result of the CFPB’s prosecution,” the release said. “This distribution will provide financial redress to thousands of consumers who Think Finance lied to, and who lost money due to the company’s illegal practices.”

Meanwhile, PYMNTS on Tuesday examined the potential fallout from a pending Supreme Court ruling on the constitutionality of the CFPB’s funding mechanism.

If the court sides against the CFPB, PYMNTS wrote, one of the repercussions could be that the watchdog’s enforcement actions going back years would also have been unconstitutional.

“To get a sense of scope and impact, consider the fact that last year alone, the agency filed 29 enforcement actions and resolved through final orders six previously filed lawsuits,” that report said. “The corporates and banks that were on the receiving end of those actions paid $3.1 billion in compensation to individuals and paid nearly $500 million in civil money penalties.”

The issue has already had a chilling effect on one action that was due to go into effect Tuesday, capping most credit card late fees at $8, down from the standard $32.

Last week, Judge Mark Pittman of the U.S. District Court for the Northern District granted an injunction that halted the rule from taking effect, citing a 2022 court decision that found the CFPB’s funding structure unconstitutional in his ruling.

“Consequently, any regulations promulgated under that regime are likely unconstitutional as well,” Pittman wrote. “Thus, plaintiffs establish a likelihood of success on the merits.”