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The
U.S. Consumer Financial Protection Bureau (CFPB) said in the
lawsuit filed in federal court in Greenville, South Carolina,
that Heights Finance Holding Co. violated laws against unfair
and abusive lending practices by "churning" loans through
repeated refinancing, putting around 10,000 borrowers in
continuous debt from 2013 to at least 2020.
The agency sought an unspecified fine, refunds for harmed
consumers, and an order barring the company from violating the
law.
CFPB Director Rohit Chopra said that what the company "sold as a
financial lifeline was, in reality, pushing customers into
financial quicksand."
Curo issued a statement on Tuesday saying the case related to
small loans originated by subsidiaries of Heights Finance before
Curo acquired the company for $360 million in late 2021 from
private equity firm Milestone Partners.
"Curo denies the allegations and will vigorously defend its
business practices," the company said.
The CFPB said that Heights Finance, which operates in Texas,
Oklahoma, Alabama, Georgia, Tennessee, and South Carolina, took
advantage of low income borrowers by not offering alternatives
to refinancing, which carried a fee each time.
The company incentivised employees to persuade delinquent
borrowers to refinance or pay past due balances immediately, the
CFPB said, citing emails from supervisors.
"Team look at the accounts that are begging for help. They are
past due and are screaming they don't have the money to pay you
so get to work selling them the benefits," a supervisor wrote in
one email, according to the complaint.
"If they don't want to refi then ask for your money don't give
an extra week or two don't let it be their option!” the email
read.
The agency said Heights Finance generated 40% of its net revenue
from repeated refinances.
Curo stock was trading at around $1.13 in the early afternoon on
Tuesday, down around 5% from Monday's closing price of $1.19 per
share.
The case is CFPB v. Heights Finance Holding Co. et al., No. ,
U.S. District Court, District of South Carolina.
(Reporting by Jody Godoy in New YorkEditing by Mark Potter)
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