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Mission Hills payday lender James Carnes to appeal multimillion-dollar penalty

The Consumer Financial Protection Bureau said Mission Hills payday lender James Carnes and his company extended payday loans that deceived consumers about the cost of their loans and continued to debit borrowers’ accounts after they canceled authorization.
The Consumer Financial Protection Bureau said Mission Hills payday lender James Carnes and his company extended payday loans that deceived consumers about the cost of their loans and continued to debit borrowers’ accounts after they canceled authorization. The National Law Journal

Attorneys for Mission Hills businessman James Carnes plan to appeal a judge’s recommendation that he and his company pay $38.1 million in restitution for a payday lending business that a federal agency said promoted illegal loans.

An administrative law judge on Sept. 27 also recommended that Carnes pay a $5.4 million civil penalty in connection with his business, Integrity Advance.

The decision by Judge Parlen McKenna comes after the Consumer Financial Protection Bureau, an independent federal watchdog agency, said Carnes and Integrity Advance extended payday loans that deceived consumers about the cost of their loans and continued to debit borrowers’ accounts after they canceled authorization.

Carnes’ notice of appeal called the outcome of the case “arbitrary, capricious, an abuse of discretion, not in accordance with law, and/or unsupported by reliable, probative, and substantial evidence.” Carnes’ attorney declined to comment on the appeal.

The consumer agency ran into trouble of its own Tuesday after a federal appellate court ruled that the structure of the agency was unconstitutional. A three-judge panel for the U.S. Court of Appeals for the District of Columbia in Washington, D.C., ruled that the CFPB vests too much power in its director, unchecked by other branches of the government.

“The bureau respectfully disagrees with the court’s decision,” CFPB spokeswoman Moira Vahey said in a statement.

Steve Vockrodt: 816-234-4277, @st_vockrodt

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