The Consumer Financial Protection Bureau (CFPB) has announced a settlement with payday lender Cash Express, which will pay approximately $32,000 in restitution to consumers, as well as a $200,000 civil money penalty for violating the Consumer Financial Protection Act (CFPA).
Based in Tennessee, Cash Express offers high-cost, short-term loans, including payday and title loans, in additions to check-cashing services. The company owns around 328 retail lending locations throughout Tennessee, Kentucky, Alabama and Mississippi.
According to a press release, CFPB found that Cash Express "violated the [CFPA] by deceptively threatening in collection letters that it would take legal action against consumers, even though the debts were past the date for suing on legal claims, and it was not Cash Express’ practice to file lawsuits against these consumers."
In addition, the agency found that Cash Express falsely claimed that it might report negative credit information for late or missed payments, though the company never sent that information to the credit bureaus. Cash Express further violated the CFPA by withholding funds during check-cashing transactions to satisfy outstanding loan amounts, but never disclosed this practice to the consumer before the transaction.
Under the terms of the consent order, Cash Express and its subsidiaries are banned from automatically taking money from check-cashing transactions without meeting certain conditions. The company is also prohibited from misrepresenting its consumer reporting activities, as well as its intention or likelihood of filing suit regarding unpaid debts.
This is the latest settlement that the CFPB has made with a payday lender. In August, the agency announced it entered into a settlement agreement with Richard Moseley, Sr., Richard Moseley, Jr, and 20 interrelated corporate entities controlled by the two regarding payday loans. Under the terms of the settlement, the defendants are banned from the industry, have to forfeit about $14 million in assets and must pay a $1 civil money penalty.