Ballard Spahr offices in Washington. Credit: Diego M. Radzinschi / NLJ

The Consumer Financial Protection Bureau this week slightly increased the civil penalty a loan marketing company must pay to resolve accusations that it scammed former National Football League players and 9/11 first responders, rebuffing its push for more favorable settlement terms from the Trump-appointed leadership at the agency.

The company, New Jersey-based Top Notch Funding, agreed in September to pay $70,000 in penalties and to be permanently prohibited from offering loans or advances to consumers awaiting payments from settlements or victim-compensation funds. The CFPB had accused Top Notch of lying about the costs of loans it was offering to consumers, including former NFL players who were awaiting payments from the landmark concussion settlement and first responders entitled to payments from a victim-compensation fund created by Congress.

“It is reprehensible that Top Notch and its owner sought to scam NFL concussion victims, 9/11 heroes, and others to turn a quick profit,” the CFPB's then-director, Richard Cordray, said in a statement in September. “We allege that this company, its owner, and its associate misled vulnerable consumers by lying about the terms of the deals they offered. Our proposed order seeks to knock these parties out of this business altogether, and impose penalties on them.”

Gregory Woods (2013) Photo by Diego M. Radzinschi/ NLJ

The CFPB submitted the settlement to U.S. District Judge Gregory Woods of the Southern District of New York. In October, Woods, reviewing the merits of the agreement, asked for more information to justify signing off on the terms. Cordray's resignation from the agency in November offered Top Notch a window to try to rework the terms of the deal, court papers show. And the company's lawyers at Ballard Spahr pushed to seize on it by returning to the bargaining table.

“Given these highly unusual and significant circumstances and ongoing developments that may immeasurably impact defendants, we respectfully request 45 days to revisit discussions with [the CFPB] and attempt to reach an alternative resolution,” James Kim, of counsel at Ballard Spahr, wrote in a December letter to Woods.

Kim's letter pointed to the feud over the acting leadership of the Obama-era agency. After Cordray's resignation, his would-be successor, Leandra English, sued the interim leader the Trump administration installed—Mick Mulvaney, the White House budget director.

A new proposed settlement, disclosed Tuesday in the U.S. District Court for the Southern District of New York, shows that renewed discussions did not provide Top Notch with a discount.

Instead, the company and related individuals will pay a $75,000 penalty. The new settlement proposal, like the one from September, will also permanently prohibit Top Notch from providing credit or advances to consumers entitled to payments from legal settlements or victim compensation funds.

The CFPB and Kim declined to comment.

Kim, in his December letter, cited the company's “limited financial means” and wrote that Top Notch had agreed to the earlier settlement terms based on “pragmatic decisions reflecting the extreme uneven bargaining power between the parties and the desire to avoid protracted and costly litigation with a powerful federal agency.” Kim's letter also noted that Mulvaney had imposed a freeze on new rules and pending enforcement actions.

Kim also pointed to a similar matter pending in Manhattan federal court in which RD Legal Funding, a company the CFPB accused of scamming concussion victims and 9/11 first responders with costly advances on settlement payouts, was challenging the CFPB's authority to bring the case.

The case filed by RD Legal Funding is pending in the U.S. District Court for the Southern District of New York.

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