CFPB Sues for UDAAP Violations

On 7/6/2020, the CFPB announced the filing of a lawsuit against My Loan Doctor LLC and its founder, Edgar Radjabli. In their release, the CFPB alleges that “Loan Doctor and Radjabli made several false, misleading, and inaccurate marketing representations in advertising Loan Doctor’s “Healthcare Finance (HCF) Savings CD Account,” in violation of the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts or practices. As the Bureau’s complaint alleges, starting in August 2019, Loan Doctor took more than $15 million from at least 400 consumers who opened and deposited money into Loan Doctor’s deceptively advertised product.”

In addition, the CFPB aledges that Loan Doctor and its founder engaged in several separate UDAAP violations:

  • “Loan Doctor and Radjabli falsely represented that the money consumers deposited into Loan Doctor’s HCF High Yield CD Accounts would be used to originate loans for healthcare professionals and that Loan Doctor, before making a loan, would have an investor lined up to purchase it after it was made; in fact, Loan Doctor never used the deposits to originate loans for healthcare professionals and never entered into a contract with a buyer or investor to purchase a loan.

  • Loan Doctor and Radjabli falsely represented that the money consumers deposited into Loan Doctor’s HCF High Yield CD Accounts, when not being used to originate loans, would be held in an FDIC-insured account, an account insured by Lloyd’s of London, or a “cash alternative” or “cash equivalent,” and, further, that Loan Doctor would maintain a cash reserve in an amount “equivalent to” the amount consumers deposited; in fact, consumers’ deposits were invested in actively traded securities or loaned, through a third party, to investors using individual stock portfolios as collateral.

  • Loan Doctor and Radjabli falsely represented that Loan Doctor was a commercial bank and that consumers’ deposits were safe and comparable to a traditional savings account with a guaranteed return; in fact, Loan Doctor was not a commercial bank, and consumers’ deposits were invested in volatile securities or securities-backed investments.

  • Loan Doctor and Radjabli falsely represented that Loan Doctor’s HCF High Yield CD Accounts paid interest at rates between 5 percent and 6.25 percent in the years before 2019; in fact, Loan Doctor did not even begin taking consumer deposits until August 2019.”

The full CFPB release can be found here.

CFPB Final Rule on Small Dollar Lending

CFPB Proposal on HPML Escrow Exemptions