The Consumer Financial Protection Bureau has filed a lawsuit against a fintech for allegedly violating laws against unfair lending practices by pushing customers to refinance.
The lawsuit, filed in the U.S. District Court for South Carolina, claims that Heights Finance Holding Co., a Greenville, S.C., unit of Curo Group Holdings, identified struggling borrowers, and then subjected them to repeated refinancing.
Heights was previously known as Southern Management.
“The CFPB is suing the Southern lending conglomerate for illegally churning loans and harvesting fees from their customers,” CFPB Director Rohit Chopra said in a press release. “What Southern sold as a financial lifeline was, in reality, pushing customers into financial quicksand.”
The CFPB alleged that, from 2013 to 2020, Heights had about 10,000 consumers mired in debt. The lawsuit claims that about 70% of the company’s receivables are attributable to refinanced loans.
“While these borrowers make up just under 10% of Southern’s total customer base, their refinances generate 40% of the company’s net revenue,” the lawsuit claims.
The bureau wants a court order barring Heights from violating the law, award relief to the consumers, and impose a civil money penalty.
Curo, in its own statement, said the CFPB’s complaint refers to certain small loans that were originated by Heights’ subsidiaries prior to 2021. The company said that small loans represented less than 15% of its direct lending portfolio on June 30.
“The company provides its customers with compliant and valuable access to credit,” the fintech said. “Curo denies the allegations and will vigorously defend its business practices.”