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CFPB Announces Consent Order with Small-Dollar Lender

The CFPB announced that it has entered into a consent order with Cash Express, LLC to settle charges that the company engaged in deceptive and abusive acts or practices in violation of the Consumer Financial Protection Act (CFPA).  The CFPB’s press release describes Cash Express as a small-dollar lender offering high-cost, short-term loans, such as payday and title loans, as well as check-cashing services, and that owns and operates approximately 328 retail lending outlets in four states.

The consent order sets forth the following findings and conclusions:

  • Cash Express sent collection letters to consumers owing debts as to which the applicable statute of limitations had expired in which it represented, directly or indirectly, expressly or by implication, that it would take legal action against them if a payment was not made.  It was not, in fact, Cash Express’s practice to file collection lawsuits against consumers with time-barred debts.  The representations made by Cash Express constituted deceptive acts or practices in violation of the CFPA.

  • Cash Express represented in its loan applications, privacy policy disclosures, collection letters, and loan agreements that it may furnish information about borrowers to consumer reporting agencies.  Cash Express did not, in fact, furnish information to CRAs.  The representations made by Cash Express constituted deceptive acts or practices in violation of the CFPA.

  • Cash Express disclosed in its application and deferred presentment and signature agreements that it may deduct funds owed on a previous loan by a customer using its check cashing services and consumers signed acknowledgments that they had received these disclosures.  Cash Express instructed its employees not to disclose at any time during a check cashing transaction that it would deduct previously owed amounts from the check proceeds.  Consumers may not have selected Cash Express to cash their checks if they had been informed at the point of check-cashing about the possibility of a deduction.  The manner in which Cash Express conducted such deductions constituted abusive acts and practices in violation of the CFPA.

The consent order requires Cash Express to pay a $200,000 civil money penalty to the Bureau.  It also requires Cash Express to pay approximately $32,000 in restitution, representing payments made during the relevant period by consumers owing time-barred debts within 90 days of receiving collection letters threatening legal action.  Cash Express is prohibited from deducting debt payments from checks cashed by consumers unless it has provided a clear and prominent disclosure about the deduction to the consumer at the time of the check cashing transaction and the consumer has affirmatively consented in writing to the deduction before the transaction is completed.  It is also prohibited from making misrepresentations about its consumer reporting activities and its intention to file a suit to collect a time-barred debt.

Copyright © by Ballard Spahr LLP

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About this Author

Barbara S. Mishkin, Ballard Spahr, Philadelphia, Deceptive Practices Lawyer, Fair Debt Collection Practices Act, Gramm Leach Bliley
Of Counsel

Barbara Mishkin focuses on consumer compliance and banking law. The federal laws with which Ms. Mishkin has dealt extensively include the Truth in Lending Act, Equal Credit Opportunity Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, and Gramm-Leach-Bliley Act. She also has significant experience with state usury and lender licensing laws, as well as state laws prohibiting unfair and deceptive acts and practices.

American Bar Association, member, Consumer Financial Services Committee;...

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