SHERMAN, Texas (Legal Newsline) - The federal Consumer Financial Protection Bureau wants a Texas federal judge to throw out claims it lacks the authority to prosecute a company offering lease-to-own financial products.
Acima, owned by Rent-a-Center, sued the CFPB in Sherman federal court in July, arguing the agency is not allowed to regulate the type of agreements it offers. Acima approves consumers for a certain amount of money, those consumers choose home good products and Acima purchases them.
Consumers then make payments, ultimately leading to them owning the products they selected. The CFPB alleges Acima ends up making more than 200% of the products' retail values.
Acima says the CFPB has been investigating it for almost four years, even though it says its products aren't "credit."
"Acima cooperated with the Bureau's multi-year investigation, with the hope that, once the CFPB fully understood Acima's business, the CFPB would recognize that it lacked legal authority to investigate the company for purported violations of statutes that are plainly inapplicable to Acima's lease-to-own transactions," Acima's complaint says.
"The CFPB has repeatedly ignored Acima's arguments and has incessantly plowed ahead, undeterred by the statutory and constitutional constraints on its investigative and enforcement authority under federal law."
The July 22 lawsuit hoped to block enforcement actions by the CFPB. Four days later, the CFPB sued Acima in Utah federal court, alleging illegal lending in five million financing agreements.
On Sept. 23, the CFPB moved to dismiss the Texas lawsuit against it, arguing Acima can defend itself in the Utah suit instead.
"Plaintiffs emphasize that various Acima officers and managers 'are' based in (Texas) and that 'major corporate decisions' about Acima 'are' made here, but they do not allege that those officers and managers were based here, or made relevant decisions here, during the relevant time period: the 11 years leading up to the ling of the CFPB's complaint when the CFPB claims Acima was violating the law," the CFPB's motion to dismiss says.
"To the contrary, Plaintiffs' only allegation that touches on the past location of any Acima personnel is its assertion that Utah resident (Aaron) Allred co-founded the company in 2013, was its CEO 'through August 2020,' and 'worked for Acima for a time' thereafter."
In the event the case is not dismissed, it could be sent to Utah to the same judge handling the case in that state, the CFPB says.
And the injunctive relief it seeks in Texas could be obtained in Utah, the CFPB says, by moving to dismiss that suit.
"(I)f Plaintiffs believe that the CFPB's enforcement action is unlawful - because the CFPB is exceeding its statutory authority or because Plaintiffs did not have fair notice that its conduct was illegal or because of some infirmity with the CFPB's funding - then they are free to make those arguments as a defense in the enforcement action," the CFPB says.
"The chance to raise their challenges there is an adequate remedy at law that precludes them from obtaining an injunction here."