07
Sep

Serious Trouble for a PDL_Lead_Aggregator Again: Tribal Sovereign Model Attacked?

Major Payday Loan Lead Aggregator in Trouble Again

CONSUMER FINANCIAL PROTECTION BUREAU TAKES ACTION AGAINST ZERO PARALLEL FOR STEERING CONSUMERS TOWARD BAD DEALS
Bureau Orders Zero Parallel and Its Owner to Pay $350,000 and Stop Their Abusive Practices

[Again, thanks for being a loyal subscriber! Send thoughts, comments, questions to: Jer Trihouse]

1st they were T3Leads.

Now, they’re Zero Parallel

Our industry simply cannot tolerate “cowboys.” On the other hand, the CFPB made charges against Zero Parallel for:

There is no need to “play” on the fringes! DISCLOSE EVERYTHING and stay out of trouble! The millions of consumers and small businesses reaching out for MONEY are not shopping rates. They simply want a fast, easy, PRIVATE transaction.

 

So, the big, bad CFPB with their unlimited budget focuses on Zero Parallel! Why? Because of Item #17 above? Could this really be an attack on the tribe sovereign model? Is it cheaper for Zero Parallel to simply payoff the government hacks at the CFPB rather than enlist expensive legal help? Shouldn’t the tribe payday loan association get involved? In an effort to protect their interests? Perhaps Allen Parker over at Consultants4Tribes.com will share his take on this!

 

Zero Parallel admitted to no wrongdoing. And I have not been in contact with Davit lately regarding this CFPB matter. But, I do know what happened to Blue Global; another lead generator/aggregator! $110M fine… bankruptcy…

 

PayPal invested in Lendup. Lendup funds small dollar loans to consumers. Why fund Lendup? PalPal continues to look for ways to make money. They decided that credit and lending is the way to make serious money!

 

Enova lends nearly $300M per quarter in small dollar loans.

 

Uplift, a very new lender founded by the guy who was thrown out of Lending Club, already initiated $1B dollars in small dollar loans.

 

Prodigy Finance: Raised $240M in equity and debt. They’re a student online lender. They focus on students paying $40K year to go to school. Borrow $$ against their future earning/career. Prodigy has $40M in equity and $200M in debt financing available.

 

I can name another 100+ lenders that continue to earn inordinate profits and raise millions by lending small dollar loans of $300 to $1000 and more to “average” consumers throughout the world.

 

So why do a few knuckleheads in our lending vertical DO STUPID STUFF? There is no need. Lenders can DISCLOSE EVERYTHING and still make money!

 

I can tell you there are several VERY SMART, EXPERIENCED small dollar loan operators – entrepreneurs having SERIOUS operations experience – ready, willing and able to take on these inefficient behemoths and achieve SERIOUS ROI’s for their investors. I’m talking about hybrid debt and equity deals for investors in search of double digit annual returns combined with equity in multi-million dollar loan portfolios! [You want an intro? Reach out: TrihouseConsulting@Gmail.com ]

 

“The Consumer Financial Protection Bureau (CFPB) took action against an online lead aggregator for steering consumers toward lenders who offered illegal or unlicensed loans that were void in the consumer’s state.”

 

“Zero Parallel, LLC sold consumers’ payday and installment loan applications to lenders it knew were likely to make void loans that the lenders had no legal right to collect.”

 

The CFPB also submitted a proposed order in a separate case that would resolve a pending lawsuit against Zero Parallel’s owner, Davit Gasparyan, for engaging in similarly illegal conduct at his prior company, T3Leads.

 

The CFPB ordered Zero Parallel to end its illegal conduct and pay a $100,000 penalty. The proposed order against Gasparyan would prohibit him from engaging in the same abusive practice and require him to pay a $250,000 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.”

 

Zero Parallel, a lead aggregator, is based in Glendale, Calif. Lead aggregators buy consumer information—called leads—from lead generators who operate websites that market payday and installment loans. Lead aggregators sell those leads to purchasers, typically payday or installment lenders.

 

Consumers who applied for loans through Zero Parallel’s network had no control over which lenders received their applications. Zero Parallel regularly sold leads for consumers located in states where the resulting loan was void.

 

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB can take action against institutions or individuals engaged in or substantially assisting unfair, deceptive, or abusive acts or practices or that otherwise violate federal consumer financial laws.

 

The CFPB found that Zero Parallel committed an abusive practice by selling loan applications to lenders in a manner that prevented consumers from understanding the risks, costs, or conditions of the loans they were offered, and the order entered today puts a stop to it. Specifically, the CFPB’s consent order requires Zero Parallel to:

  • Ensure loans resulting from applications it sells are not void: Zero Parallel must undertake reasonable efforts to ensure that loan applications it sells do not result in consumer loans that are void under the laws of the consumer’s state of residence.
  • Pay a $100,000 civil money penalty: Zero Parallel must pay $100,000 to the Consumer Bureau’s Civil Penalty Fund.

Davit Gasparyan is Zero Parallel’s president and primary owner. The CFPB previously sued Gasparyan over his involvement with another lead aggregator, T3Leads. In that case, the CFPB today submitted a proposed order, which, if approved, would resolve its lawsuit against Gasparyan.

 

If entered by the court, the proposed order against Gasparyan for his T3Leads-related actions would require him and others under his direction to:

  • Ensure loans resulting from applications he sells are not void: Gasparyan must undertake reasonable efforts, including verifying required licenses for his purchasers, to ensure that loan applications he sells do not result in consumer loans that are void under the laws of the consumer’s state of residence.
  • Ensure that lead generators do not deceive consumers: Gasparyan must not solicit or receive loan applications through any means that uses misleading, inaccurate, or false statements. Furthermore, he must review the content of lead generators’ advertising before receiving loan applications to ensure that it does not contain misleading, inaccurate, or false statements and that the lead generators disclose to consumers how their loan applications will be conveyed to others.
  • Pay a $250,000 civil money penalty: Gasparyan must pay $250,000 to the Consumer Bureau’s Civil Penalty Fund.

So… AGAIN: The CFPB states, “Ensure loans resulting from applications Zero Parallel sells are not void: Gasparyan must undertake reasonable efforts, including verifying required licenses for his purchasers, to ensure that loan applications he sells do not result in consumer loans that are void under the laws of the consumer’s state of residence. Does the CFPB THINK they have regulatory power over federally recognized, sovereign, Native American Indian Tribes? No doubt, the CFPB will answer in the affirmative! 

Jer@TrihouseConsulting.com 702-208-6736 Cell
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