A district court judge on Friday dealt a blow to the Consumer Financial Protection Bureau by dismissing a lawsuit against the payment processor Intercept Corp. and its two top executives, arguing that it failed to present enough facts in the case.

The CFPB filed a lawsuit last year against Intercept, a Fargo, N.D., third-party payment firm, and its co-owners, Craig Dresser and Bryan Smith, alleging that it processed electronic funds transfers on behalf of payday lenders in states where payday loans are illegal.

Judge Ralph R. Erickson, of the U.S. District Court for the District of North Dakota, wrote a scathing 10-page opinion in which he criticized the CFPB for failing to present enough evidence to support filing a lawsuit.

"Although the complaint need not contain detailed factual allegations, it must contain 'more than an unadorned, the-defendant-unlawfully-harmed-me accusation,' " Erickson wrote. "Formulaic recitations of the elements of a claim or assertions lacking factual enhancement are not sufficient. The facts alleged in the complaint must be plausible, not merely conceivable."

An old school bronze justice scale with flate weighing plates connected by chains on an isolated white background
"Although the complaint need not contain detailed factual allegations, it must contain 'more than an unadorned, the-defendant-unlawfully-harmed-me accusation,' " a judge wrote in a decision against the CFPB.

The CFPB declined to comment. Intercept's attorney, Richard Zack, a partner at Pepper Hamilton, did not immediately return a call seeking comment.

The CFPB had alleged that Intercept ignored warnings from financial institutions of possible illegal activity by its clients about unauthorized debits and other possibly suspicious activity. The agency also alleged the company and its executives did not properly monitor or respond to consumer complaints and high return rates for insufficient funds or unauthorized debits.

"Although the complaint contains several allegations that Intercept engaged in or assisted in unfair acts or practices, it never pleads facts sufficient to support the legal conclusion that consumers were injured or likely to be injured," Erickson wrote.

The CFPB also claimed that Dresser, the company's CEO, and Smith, its president, had ignored warning signs of potential fraud, including warnings from banks.

The judge said the lawsuit "does not contain sufficient factual allegations to back up its conclusory statements regarding Intercept’s allegedly unlawful acts or omissions."

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