In the latest of a string of decisions that have gone against the short-term “payday” loan industry, the Community Financial Protection Bureau (CFPB) has fined ACE Cash Express $5 million for predatory loan practices. The settlement also include $5 million that ACE is to payout in refunds to those victimized by their lending practices.
“ACE used false threats, intimidation, and harassing calls to bully payday borrowers into a cycle of debt,” said CFPB Director Richard Cordray in a released statement. “This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back. The CFPB was created to stand up for consumers and today we are taking action to put an end to this illegal, predatory behavior.
The Texas-based lender has 1,500 storefront locations in 36 states and is one of the nation’s largest networks of payday lenders. The CFPB released a report in March of this year that noted that most lendees roll over their loan within two weeks and end up paying more in fees than they originally borrowed.
Apart from the $10 million the settlement will cost ACE, the company is also no longer allowed to engage in high pressure debt collection tactics or pressure consumers to extend their loan, thus pushing themselves into an unending cycle of debt.
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