Collector - June 2017 - 42

IAP

Federal Court Nixes CFPB
Enforcement Action That Claimed
a Payment Processor Ignored Fraud
A North Dakota federal judge tossed out a lawsuit filed by the CFPB against a
payment processor because it failed to present sufficient evidence in the case.
By Karen Scheibe Eliason

I

n March, the U.S. District Court for the
District of North Dakota dismissed an
enforcement action filed by the Consumer
Financial Protection Bureau against a
Fargo, N.D.-based third-party payment
firm, Intercept Corp., and two of its officers,
because the CFPB did not provide enough
evidence to support its claims.
The bureau filed the complaint last June,
accusing the payment processor and its
two top executives of violating federal law
by processing electronic fund transfers on
behalf of payday loan companies and other
short-term consumer lenders in states where
payday loans are illegal.
In particular, the CFPB alleged in its
suit that Intercept and its owners violated
Dodd-Frank's prohibition against unfair,
deceptive, and abusive acts and practices
(UDAAP) by "processing payments for
clients without adequately investigating,
monitoring or responding to red flags that
indicated some clients were breaking the
law or deceiving customers."
In Consumer Financial Protection Bureau
v. Intercept Corporation, d/b/a InterceptEFT,
et al., No. 16-00144 (D.N.D., March 17,
2017), North Dakota federal court Judge
Ralph R. Erickson did not accept the CFPB's
arguments and, therefore, dismissed the
CFPB's complaint.
In granting the payment processor's motion
to dismiss, the district court wrote that
"[a]lthough the complaint need not contain
detailed factual allegations, it must contain
'more than an unadorned, the defendantunlawfully-harmed-me accusation.'"
Based on this reasoning, the district court
concluded that the CFPB's complaint failed to
"contain sufficient factual allegations to back up

42

its conclusory statements regarding Intercept's
allegedly unlawful acts or omissions."
Judge Erickson explained that the CFPB's
complaint "simply does not sufficiently identify
particular clients whose actions provided 'red
flags' to Intercept or how Intercept's failure to
act upon those 'red flags' caused harm or was
likely to cause harm to any identified consumer
or groups of consumers."
Although the district court dismissed the
CFPB's enforcement action in the Intercept

Corp. case, it did so without prejudice.
This means that the CFPB could renew the
action against the payment processor and its
officers in the North Dakota federal district
court or another court.
If you want to read more about the
most recent significant judicial decisions
involving the credit and collection industry,
ACA members can always find concise case
summaries at www.acainternational.org/
industry-advancement-program.

ACAINTERNATIONAL.ORG


http://www.acainternational.org/industry-advancement-program http://www.acainternational.org/industry-advancement-program http://www.webrecon.com http://www.ACAINTERNATIONAL.ORG

Table of Contents for the Digital Edition of Collector - June 2017

President's Page
Industry News
Best Practices
FYI
Collection Tips
In Case of Emergency
Pulling Back the Curtain
ACA International's 2017 Convention and Exposition Preview
Calendar
Honor Roll
Seeing Eye to Eye
The Business Battle
Blueprint for Success
Federal Court Nixes CFPB Enforcement Action That Claimed a Payment Processor Ignored Fraud
Compliance
ACA SearchPoint
Last Word
Collector - June 2017 - Cover1
Collector - June 2017 - Cover2
Collector - June 2017 - 1
Collector - June 2017 - 2
Collector - June 2017 - President's Page
Collector - June 2017 - Industry News
Collector - June 2017 - 5
Collector - June 2017 - 6
Collector - June 2017 - 7
Collector - June 2017 - Best Practices
Collector - June 2017 - 9
Collector - June 2017 - FYI
Collector - June 2017 - 11
Collector - June 2017 - Collection Tips
Collector - June 2017 - 13
Collector - June 2017 - In Case of Emergency
Collector - June 2017 - 15
Collector - June 2017 - 16
Collector - June 2017 - 17
Collector - June 2017 - 18
Collector - June 2017 - 19
Collector - June 2017 - Pulling Back the Curtain
Collector - June 2017 - 21
Collector - June 2017 - 22
Collector - June 2017 - 23
Collector - June 2017 - 24
Collector - June 2017 - 25
Collector - June 2017 - ACA International's 2017 Convention and Exposition Preview
Collector - June 2017 - 27
Collector - June 2017 - 28
Collector - June 2017 - 29
Collector - June 2017 - 30
Collector - June 2017 - 31
Collector - June 2017 - Calendar
Collector - June 2017 - Honor Roll
Collector - June 2017 - Seeing Eye to Eye
Collector - June 2017 - 35
Collector - June 2017 - The Business Battle
Collector - June 2017 - 37
Collector - June 2017 - 38
Collector - June 2017 - 39
Collector - June 2017 - Blueprint for Success
Collector - June 2017 - 41
Collector - June 2017 - Federal Court Nixes CFPB Enforcement Action That Claimed a Payment Processor Ignored Fraud
Collector - June 2017 - 43
Collector - June 2017 - Compliance
Collector - June 2017 - 45
Collector - June 2017 - ACA SearchPoint
Collector - June 2017 - 47
Collector - June 2017 - Last Word
Collector - June 2017 - Cover3
Collector - June 2017 - Cover4
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