The CFPB has entered into a consent order with Springstone Financial, LLC to settle charges that the company was responsible for alleged deceptive and misleading acts and practices in connection with enrolling consumers in a financing program to pay for dental work.  The consent order requires the company to provide $700,000 in redress to consumers who paid deferred interest under the program but does not impose a civil money penalty.

According to the consent order, Springstone administered a financing program offered through partner banks that allowed a consumer to obtain a no-interest loan to pay for health care services if the loan balance was paid during the promotional period.  Consumers could apply for a loan in the office of a health care provider participating in the program (the “Provider-Assisted Channel).  Staff members in the provider’s office would give application materials to consumers, convey information about the program, and submit completed applications to Springstone.

The CFPB claimed that in some instances, staff members in offices of dental care providers told consumers that the product was a no-interest loan rather than a deferred interest loan and failed to inform consumers that a 22.98% APR would apply from the date of purchase if the loan balance was not paid before the promotional period ended.  According to the CFPB, even if a consumer enrolling in the program received appropriate written disclosures, the contradictory or misleading information provided by staff members caused consumers to misunderstand the loan product.  The CFPB claimed that such alleged deceptive and misleading acts and practices were the result of Springstone’s operation of the Provider-Assisted Channel and its failure to adequately train and monitor participating health care providers.  The program was discontinued in 2014.

The consent order requires Springstone to work with its partner banks to issue a credit or send a reimbursement check to those consumers with an open account and mail a reimbursement check to consumers with a closed or inactive account.

In February 2014, the CFPB published a blog post that provided advice to consumers on deferred interest credit cards offered by health care providers, including how to avoid paying interest and what happens if the balance is not paid by the end of the promotional period.