Without explanation, the Consumer Financial Protection Bureau has dropped a lawsuit in Kansas it had filed a year ago against four payday lending companies.
The move reinforced worries among consumer advocates that the federal watchdog agency is backing away from scrutinizing the payday lending industry. Big players in the industry from the Kansas City area have been caught up in criminal investigations in recent years.
The CFPB, a federal agency formed in 2011 in the aftermath of the Great Recession, filed a notice of voluntary dismissal Thursday in its case against Golden Valley Lending and three other payday lending enterprises: Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial.
The agency had alleged in its lawsuit that the four companies charged interest rates of 440 percent to 950 percent, beyond what several states allow for consumer loans.
The CFPB dismissed its case against the four companies without prejudice, which means the agency can re-file the case in the future. “The Bureau will continue to investigate the transactions that were at issue,” the agency said in a statement. “Because it is an open enforcement matter, we cannot provide further comment.”
The CFPB did not directly address questions about changes in policy at the agency as it related to payday lenders.