An online lead aggregator has caught the ire of the Consumer Financial Protection Bureau (CFPB) for directing consumers towards lenders who offered illegal or unlicensed loan services.
Zero Parallel, LLC has been charged by the agency of allegedly selling consumers’ payday and installment loan applications to collectors who were likely to make void loans that lenders had no legal right to collect. The CFPB’s proposed order against the company and its owner Davit Gasparyan demands an end to these illegal practices and imposes a stiff penalty.
“Zero Parallel steered consumers toward payday and installment loans that were a bad deal,” said CFPB Director Richard Cordray. “We’re ordering Zero Parallel and its owner Davit Gasparyan to pay $350,000 and to stop these illegal abusive practices.”
Void loans
The online aggregator, which is based in Glendale, California, operates by buying consumer information – or leads – from lead generators. It then turns around and sells that information to purchasers such as payday or installment lenders who take over handling the loan.
However, the CFPB charges that Zero Parallel often sold leads for consumers in states where the resulting loan was void and unable to be collected. These practices often led individuals into situations where they did not understand the risks, costs, and conditions of the loans they were being offered, the agency said.
Under the consent order, Zero Parallel must undertake reasonable efforts to ensure that loan applications it sells do not lead to loans that are void according to where consumers live. The company must also pay $100,000 to the Consumer Bureau’s Civil Penalty Fund.
In a separate suit, the CFPB has submitted a consent order against Davit Gasparyan for conducting similar practices with another lead aggregator called T3Leads. If approved, the order would ensure that the owner also undertakes reasonable efforts to verify required licenses for lead purchasers and that loan applications do not lead to void loans. The order also stipulates that Gasparyan be barred from deceiving consumers in the future and pay a $250,000 civil money penalty to the Consumer Bureau’s Civil Penalty Fund.