On July 19, 2023, the Consumer Financial Protection Bureau (“CFPB”) sued Snap Finance LLC, Snap R TO LLC, Snap Second Look LLC, Snap U.S. Holdings LLC, and Snap Finance Holdings LLC (collectively, the Snap Defendants or Snap). The complaint alleged that the Snap Defendants violated the: Consumer Financial Protection Act (“CFPA), 12 U.S.C. §§ 5531(a) and (d)(1),5536(a)(1)(A),(B); the Truth in Lending Act and Regulation Z, 15 U.S.C. § 1638;12 C.F.R. §§ 1026.17,1026.18; the Electronic Fund Transfer Act (“EFTA”) and Regulation E, 15 U.S.C. § 1693k; 12 C.F.R. § 1005.10(e)(1); and the Fair Credit Reporting Act and Regulation V, 15 U.S.C. § 1681 et seq. and 12 C.F.R. § 1022.42(a), (b). The Snap Defendants offer financing of a broad range of goods that ranged from jewelry to furniture to tires in over forty-seven states.The complaint targets Snap’s business model, which provided higher-risk consumers—known as “Asset-Limited Income-Constrained and Employed”—with “expensive,” one-year financing. SeeComplaint para. 3. Specifically, the CFPB alleged that Snap’s financing was illegal for various reasons. First, the Snap Defendants used misleading marketing, and their offers of financing were confusing. Second, the cost to finance the item was too expensive, twice the original price. Additionally, the financing was difficult and confusing to cancel if the customer was unhappy. Id. at paragraph 4-5. The CFPB also alleged that the Sn

9, 113 Stat. 1338 (codified as amended at 15 U.S.C. §§ 6802-6809) (excluding § 505 as it applies to § 501(b)); The Home Mortgage Disclosure Act of 1975, Pub. L. No. 94-200, 89 Stat. 1125 (codified as amended at 12 U.S.C. ch. 29); The Home Ownership and Equity Protection Act of 1994, Pub. L. No. 103-325, 108 Stat. 2190 (codified as amended at to various parts of Truth in Lending Act, particularly 15 U.S.C. §§ 1601-02, §§1639-41); The Real Estate Settlement Procedures Act of 1974, Pub. L. No. 93-533, 88 Stat. 1724 (codified as amended at 12 U.S.C. ch. 27); The S.A.F.E. Mortgage Licensing Act of 2008, Pub. L. No. 110-289, 122 Stat. 2810 (codified as amended at 12 U.S.C. ch. 51); The Truth in Lending Act, Pub. L. No. 90-321, 82 Stat. 146 (codified as amended at 15 U.S.C. ch. 41, subch. 1); The Truth in Savings Act, Pub. L. No. 102-242, 105 Stat. 2334 (codified as amended at 12 U.S.C. ch. 44); Omnibus Appropriations Act, 2009, Pub. L. No. 111-8, § 626, 123 Stat. 524 (codified as amended at 15 U.S.C. § 1638); and The Interstate Land Sales Full Disclosure Act, Pub. L. No. 90-448, 82 Stat. 590 (codified as amended at 15 U.S.C. ch. 42). 12 U.S.C. §5561 et seq. 12 U.S.C. §5565.Dormant: The Consumer Financial Protection Bureau’s Law Enforcement Program in Decline, Consumer Federation of America, https://consumerfed.org/reports/dormant-the-consumer-financial-protection-bureaus-law-enforcement-program-in-decline/ (accessed July 24, 2020).[View source.]

(See, for example, Enforcement Watch postshere,here, andhere.) The complaint also alleges violations of the Truth in Lending Act (TILA), 15 U.S.C. § 1638(a)-(b), due to Defendants’ failing to clearly disclose the annual percentage rate of the loans. The complaint seeks an injunction, disgorgement, civil penalties, and enforcement costs.

Notably, federal law contains a number of specific provisions that govern the private student loan industry. See 15 U.S.C. § 1650 (“Preventing unfair and deceptive private educational lending practices and eliminating conflicts of interest.”); 15 U.S.C. § 1638(e) (“Terms and disclosures with respect to private education loans.”); 20 U.S.C. § 1019d (“Self-certification form for private education loans.”) The CFPB’s lawsuit against ITT does not allege any violations of any of these provisions, except to the extent that such rules incorporate the general duty under TILA to formally disclose finance charges to borrowers.