Heights Finance Holding Co. f/k/a Southern Management Corporation; Covington Credit of Alabama, Inc.; Southern Finance of Tennessee, Inc.; Covington Credit of Georgia, Inc.; Southern Finance of South Carolina, Inc.; Covington Credit of Texas, Inc.; Covington Credit, Inc.; and Quick Credit Corporation
On August 22, 2023, the Bureau filed a lawsuit against Heights Finance Holding Co. f/k/a Southern Management Corporation as well as its wholly owned, state-licensed subsidiaries: Covington Credit of Alabama, Inc.; Southern Finance of Tennessee, Inc.; Covington Credit of Georgia, Inc.; Southern Finance of South Carolina, Inc.; Covington Credit of Texas, Inc.; Covington Credit, Inc.; and Quick Credit Corporation (collectively Southern). Southern is a high-cost installment lender that operates over 250 brick-and-mortar storefronts located in the states of Texas, Oklahoma, Alabama, Georgia, Tennessee, and South Carolina under a variety of trade names, including Covington Credit, Southern Finance, Quick Credit, and Heights Finance. The Bureau alleges that Southern employs numerous harmful underwriting, sales, and servicing practices for their refinanced loans that are designed to churn delinquent borrowers into continuous fee-laden debt; these fee-laden refinances erode the borrowers’ available credit and increase their total cost of borrowing with each successive refinance. The Bureau further alleges that Southern has generated hundreds of millions in loan costs and fees and that it derives 40% of its net revenue through this process of “churning” borrowers in repeated, fee-laden refinances. The Bureau alleges that Southern’s loan-churning practices violate the Consumer Financial Protection Act of 2010 because they are unfair; they are abusive because they take unreasonable advantage of borrowers’ lack of understanding of the material risks, costs, or conditions of a refinanced Southern loan; and they are abusive because they take unreasonable advantage of payment-stressed borrowers’ inability to protect their interests in the selection or use of a refinanced loan. The Bureau seeks redress for consumers, injunctive relief, and a civil money penalty.