On July 12, 2022, the CFPB filed a lawsuit against payday lender ACE Cash Express for concealing free repayment plans from struggling borrowers as well as improperly withdrawing consumers’ funds. According to the complaint, ACE’s illegal practices generated at least $240 million in fees for the company while keeping borrowers in debt.
From CFPB Director Rohit Chopra’s statement:
“Deception and misdirection allowed ACE Cash Express to pocket hundreds of millions of dollars in reborrowing fees. Today’s lawsuit is another example of the CFPB’s focus on holding repeat offenders accountable.”
ACE Cash Express is a financial services company headquartered in Irving, Texas which offers a variety of financial products, including high-cost, small-dollar payday and title loans, along with bill payment, check-cashing, and prepaid debit-card services. In 2014, the CFPB made ACE pay $10 million in penalties and borrower refunds for using illegal debt-collection tactics. These tactics included encouraging overdue borrowers to temporarily pay off their loans and then quickly re-borrow from the company. Because of the CFPB’s enforcement action, ACE used different tactics to make consumers re-borrow.
In the complaint, the CFPB alleges that ACE specifically harmed consumers by:
Concealing free repayment-plan options and funneling borrowers into costly reborrowing. The CFPB found that ACE used misleading language and waterfall scripts to dupe borrowers into refinancing loans instead of informing them that free repayment plans are available.
Withdrawing money from borrowers’ bank accounts in violation of contracts. For thousands of borrowers, ACE withdrew repayment funds through a fourth withdrawal from borrowers’ bank accounts when their contracts allowed ACE to make only up to three attempts.
The CFPB is seeking monetary relief for harmed consumers, disgorgement or compensation for unjust gains, injunctive relief, and civil money penalties.
Read the CFPB’s press release here.
The original complaint can be found here.