WASHINGTON, July 10 The U.S. consumer watchdog
on Thursday said payday lender ACE Cash Express must pay $10
million to settle accusations that it had used unfair debt
collection practices, such as threatening to sue borrowers, to
pressure them into taking out new loans.
The U.S. Consumer Financial Protection Bureau has been
probing payday lenders, which offer small loans that carry high
interest rates and must be paid back quickly.
Consumer advocates say the loans trap borrowers in a cycle
of debt. The CFPB has said many payday borrowers renew their
loans so many times that they pay more in fees than they
borrowed in the first place.
The bureau said Irving, Texas-based ACE Cash Express had
harassed customers with numerous collection calls and false
threats of lawsuits to create a sense of urgency over their
debt. It then pressured them to take out new loans or extend the
"This culture of coercion drained millions of dollars from
cash-strapped consumers who had few options to fight back," CFPB
Director Richard Cordray said.
ACE Cash Express was ordered to pay $5 million in refunds to
customers and a $5 million fine to the bureau. It also must end
unfair practices, such as disclosing debts to unauthorized third
parties, and stop pressuring borrowers to pay off loans and
quickly take out new ones, the bureau said.
The company neither admitted nor denied wrongdoing. In a
statement, ACE said it had policies to keep delinquent borrowers
from taking out new loans and that it had already enhanced its
compliance program voluntarily.
The company also said a review by an outside firm had found
that most of its collection calls met relevant standards. The
bureau said it found flaws in that study.
Congress created the CFPB in the 2010 Dodd-Frank law and
charged it with overseeing consumer financial products. The
bureau took its first enforcement action against a big payday
lender, Cash America International, last year.
ACE offers payday products, check-cashing services and
installment loans online and at stores in 36 states and the
District of Columbia, the bureau said.
(Reporting by Emily Stephenson; Editing by Lisa Von Ahn)