Settlements with related firms that misrepresented costs of offering and extending financing for airline tickets to members of the military and their families resulted in a “suspended judgment” of nearly $3.5 million, and a civil money penalty (CMP) of $1, the federal consumer financial protection agency said Monday.
In the settlement with two Kentucky-based firms and one of the firm’s principals, the Consumer Financial Protection Bureau (CFPB) said it found that one of them, Easy Military Travel (which is no longer operating) and principal Brandon Edmiston misrepresented the true cost of credit in violation of the Consumer Financial Protection Act of 2010 (CFPA).
Specifically, the bureau said, Easy Military Travel charged a fee to consumers who obtained financing through the firm above the fee that it charged to consumers who paid in full. Easy Military Travel failed, the bureau said, to include that fee in the finance charge or the annual percentage rate for consumers who obtained financing, even though it was a cost of credit. Easy Military Travel representatives, at the direction of Edmiston, also quoted falsely low monthly interest rates over the telephone to consumers, the bureau claimed
CFPB said a second, related firm, USA Service Finance, LLC (USASF) – which serviced the travel loans made by Easy Military Travel – engaged in deceptive practices in violation of the CFPA by overcharging servicemembers and their families for a debt-cancellation product for loans financing airline tickets made by Easy Military Travel and purchased and serviced by USASF.
The bureau said Edmiston and Easy Military Travel earned a suspended judgment and $1 CMP based on Easy Military Travel’s and Edmiston’s inability to pay more based on sworn financial statements submitted to the Bureau. Harmed consumers may be eligible for relief from the bureau’s Civil Penalty Fund. However, the firms are prohibited from future consumer lending targeted to servicemembers and their families.
USASF, in a consent order with the bureau, requires the firm to provide redress to borrowers who were overcharged for the debt-cancellation product, including paying $54,625 in restitution to borrowers with no outstanding balance on their loans and issuing additional restitution in the form of account credits to borrowers with outstanding balances.
The consent order also requires USASF to pay a civil money penalty of $25,000 to the bureau, and prohibits USASF from collecting on or selling the travel loans purchased from Easy Military Travel. The consent order also requires USASF to establish and update reasonable written policies and procedures for the accuracy and integrity of consumer information it furnishes to consumer reporting agencies, CFPB said.