CFPB sues payday lender ACE Cash Express
The Consumer Financial Protection Bureau (CFPB) announced a lawsuit against ACE Cash Express on Tuesday. Federal agency alleges payday lender generated $240 million or more in reborrowing fees from borrowers eligible for free repayment plans and also lied about how many times it would attempt to debit payments on borrowers’ bank accounts.
Key points to remember
- The CFPB sued payday lender ACE Cash Express for charging illegal fees and making illegal debits from borrowers’ bank accounts.
- The federal agency says the lender is a repeat offender, citing a 2014 enforcement action that resulted in $10 million in penalties and refunds to borrowers.
- The CFPB is seeking monetary relief for consumers, injunctive relief, civil penalties, and reimbursement or compensation for unfair gains.
The CFPB lawsuit against ACE Cash Express
ACE Cash Express is a payday lender that also offers title loans, check cashing, bill payment, and a number of other financial services.
But his handling of payday loans sparked a lawsuit by the CFPB. The federal agency alleges that the lender violated federal laws. More precisely:
- Hiding Free Refund Plans: In 10 states, borrowers are entitled to a free repayment plan each year, allowing them to make four equal payments instead of one lump sum, with no additional fees or interest. Instead of informing borrowers of this option, ACE Cash Express told them that their only options were a short grace period or a paid refinance. The CFPB says the lender has generated at least $240 million in fees from these borrowers since 2014.
- Withdraw money illegally: In many states, payday loan agreements state that the lender can attempt to withdraw the repayment up to three times. However, the CFPB alleges that ACE Cash Express made a fourth unauthorized withdrawal at least 3,000 times since 2016, resulting in an illegal debit of $1.3 million.
The CFPB also notes an enforcement action it took against ACE Cash Express in 2014, which ordered the payday lender to stop pressuring borrowers into debt cycles, among other practices. illegal debt collection.
The lender wrote in a press release that the lawsuit is without merit, arguing that abusive withdrawals only affected 0.028% of borrowers and that more than 140,000 borrowers used the payment plan option, arguing that this proves that customers are aware of the option.