The Consumer Financial Protection Bureau’s recent victory against an online loan servicer serves as an important lesson both as to the CFPB’s expansive use of Unfair, Deceptive or Abusive Acts or Practices and the risks associated with joint ventures as well as the mini-correspondent model. Lenders that find loopholes or technicalities contradicting the clear intent and spirit of the laws are subject to UDAAP — the trump card the CFPB can use at any time.
CashCall Inc. created a subsidiary, WS Funding LLC, organized in and under the laws of a Native American tribal land. By virtue of being subject to the tribal land laws, it was able to avoid usury laws of various states, even though CashCall was otherwise subject to these statutes.
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ABOUT ARI KAREN
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Ari Karen is an experienced litigator and speaker who has focused his practice in representing financial institutions in both government investigations and litigation before state and federal trial and appellate courts nationwide. Mr. Karen’s practice is diverse, representing clients on matters concerning banking regulations, Dodd Frank financial reform laws, contractual disputes, employment and labor statutes, wage-hour class actions, employment discrimination and fair lending matters, whistleblower complaints and non-competition claims, among others.
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