WASHINGTON, D.C. — The Consumer Financial Protection Bureau recently issued a consent order against Omni Financial of Nevada, Inc. (Omni). The Bureau found that Omni violated the Military Lending Act (MLA), Electronic Fund Transfer Act (EFTA), and Consumer Financial Protection Act of 2010 (CFPA) in connection with making installment loans.
Omni, which has its principal place of business in Las Vegas, Nevada, and operates using the names Omni Financial and Omni Military Loans, specializes in lending to consumers affiliated with the military. It originates tens of thousands of loans each year, with individual loans typically ranging from $500 to $10,000. The consent order requires that Omni pay a $2.175 million civil money penalty and imposes injunctive relief to stop ongoing violations and prevent future violations.
Today’s action is the second in the Bureau’s sweep of investigations of multiple lenders that may be violating the MLA. The MLA puts in place protections in connection with extensions of consumer credit for active-duty service members and their dependents, who are defined as “covered borrowers.” These protections include prohibiting that loans to covered borrowers be required to be repaid by “allotment.” The Department of Defense runs the allotment system, which allows service members to designate a portion of their paycheck to certain recipients. The Bureau found that, since October 2016, Omni’s loans to covered borrowers violated the MLA’s prohibition of requiring repayment by allotment.
The Bureau also found that Omni violated EFTA and the CFPA. In addition to lending to active-duty service members and their dependents, Omni lends to civilians and non-covered servicemembers, such as military retirees. The Bureau found that Omni requires all of its borrowers to provide bank account information and authorize Omni to withdraw funds from that account on the first business day after each missed payment. Omni’s requirement that consumers allow it to withdraw funds from their bank accounts violates EFTA’s prohibition against requiring consumers to preauthorize electronic fund transfers as a condition of receiving credit. The Bureau further found that these EFTA violations constituted CFPA violations.
In addition to prohibiting future violations, the consent order requires Omni to provide notice of the Bureau’s findings to all customers repaying their loans by allotment along with notice that they may change their repayment method. Omni also must provide training to employees and is prohibited from providing any incentives to employees or performance evaluations that consider the number or rate of consumers who choose to repay by allotment.
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