Several false, misleading, and inaccurate marketing representations in advertising for a Delaware-based financial services company that took $15 million in deposits but was not a bank are alleged in lawsuit filed Monday the Consumer Financial Protection Bureau (CFPB).
The bureau said its lawsuit against My Loan Doctor LLC, a Delaware financial-services company operating in West Palm Beach, Florida and New York City (and operating as “Loan Doctor”) charges that the firm made the phony claims in advertising its “Healthcare Finance (HCF) Savings CD Account.
The bureau alleges that, 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 advertised product. The agency said it brought the lawsuit under the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts or practices.
The bureau charged that the firm, and its founder Edgar Radjabli, engaged in four separate deceptive acts or practices in violation of the CFPA:
- They 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, the bureau said.
- They 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, the bureau said, consumers’ deposits were invested in actively traded securities or loaned, through a third party, to investors using individual stock portfolios as collateral.
- They 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, the bureau said.
- They falsely represented that Loan Doctor’s HCF High Yield CD Accounts paid interest at rates between 5% and 6.25% in the years before 2019; in fact, Loan Doctor did not even begin taking consumer deposits until August 2019.