Banking

Virginia company tricked immigrants into paying illegal fees, CFPB says

The Consumer Financial Protection Bureau joined three states Monday in a lawsuit alleging a Virginia company deceived immigrants detained by U.S. Immigration and Customs Enforcement.

The enforcement action, the CFPB’s first under acting Director Dave Ueijo, says Libre by Nexus claims to be a middleman for bail agents to help detainees post bond.

But after detainees were released, according to the lawsuit, the company tricked them into paying a fee of $420 a month. Libre claimed that the fee was required until the immigrant’s ICE proceeding was resolved, and that the detainee was required to wear a GPS-enabled ankle device until then, the suit said. But the fee and the device were just a scam to collect money, the authorities said.

The company “strong-arms detainees with false debt collection threats,” the CFPB said in a press release.

Libre falsely threatens immigrants that if they do not pay-up, they will face dire consequences, sometimes including threats that they will be re-detained or deported,” the agency said in the release. “Libre systematically makes false threats to sue the detainees or their families, send the accounts to collection, and report failures to pay to credit bureaus. Libre also has falsely threatened to place GPS devices on co-signers to coerce payment.”

The CFPB joined attorneys general in Massachusetts, New York and Virginia in suing Libre and its parent Nexus Services for allegedly making false and misleading statements to mostly Spanish-speaking consumers and deceiving consumers about its relationship with immigration authorities.

The action covers a span of time before Uejio took the helm of the consumer bureau, with the worst abuses alleged to have occurred between 2014 and 2017. But the lawsuit could signal a broad scope for the types of penalties sought by the agency under new Democratic leadership. The interim director has previously signaled interest in cracking down on companies that harm minorities.

“Libre is not a bail bonding company but built a business model to separate consumers from their cash,” Uejio said on a conference call Monday with reporters.

The CFPB alleges that immigrants and their co-signers were misled about what they were paying for in signing financial contracts without understanding the terms. The Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits deceptive and abusive acts and practices.

“Libre creates the reasonable impression in consumers’ minds at the time they sign up for its service that Libre has paid cash for their bond, creating a debt that must be repaid to Libre through an upfront fee and subsequent monthly payments,” the lawsuit stated.

The 49-page lawsuit was filed against Nexus; Libre by Nexus; co-founder and CEO Michael Donovan; co-founder and CFO Richard Moore; and a part owner and director, Evan Ajin.

“Libre by Nexus categorially denies all allegations in the complaint filed against the company today and looks forward to our day in court,” Donovan said in an emailed statement. “The result of their years-long investigations is a poorly drafted complaint that rehashes allegations the company has successfully defended in three different legal actions. At the same time the same immigrants Libre fights to save are housed in detention centers in the states of NY, VA, and MA, and at the orders of the same branch of government that commands the CFPB.”



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