The Consumer Financial Protection Bureau is suing payday lender Ace Cash Express, calling it a “repeat offender” and saying it drove customers into costly re-borrowing.
The Irving, Texas company also concealed free repayment plans from borrowers and withdrew money from borrowers’ bank accounts in violation of their contracts, the office said.
“Deceit and misdirection have allowed Ace Cash Express to pocket hundreds of millions of dollars in reborrowing fees. … Today’s lawsuit is another example of the CFPB’s emphasis on accountability repeat offenders,” CFPB director Rohit Chopra said in a statement on Tuesday. Press release.
Ace’s products included payday loans and small amount title loans. It primarily serves low-income borrowers who frequently refinance, refinance, or extend their loans beyond the original repayment term. In 2018 the company was released a consent order issued in 2002 by the Office of the Comptroller of the Currency which prohibited him from associating with national banks.
This isn’t the first time the CFPB has sued Ace. A lawsuit filed against the lender in 2014 alleged that it lured borrowers into a ‘debt cycle’ through illegal debt collection tactics and created a false sense of urgency to repay, according to a CFPB version published that year. The bureau says that after it launched a lawsuit against the company in 2014, it changed tactics to encourage consumers to borrow again. He said Tuesday that the company “is still bound by the order in this matter.”
The bureau claims in the new lawsuit that since 2014, Ace has collected more than $240 million in fees from customers through misleading language to indicate that the only options available to customers unable to repay their loans were a short grace period or a paying refinance. For example, the company did not inform borrowers in some states that their contracts allowed for one free repayment plan per year, the agency said.
The bureau also alleges the company breached contracts by making additional attempts to withdraw repayment funds from customers’ bank accounts, beyond the three allowed in the borrowers’ contracts.
The CFPB is seeking monetary redress for aggrieved consumers, compensation for the company’s “unfair gains”, injunctive relief and civil monetary penalties. The lawsuit was filed in the U.S. District Court for the Northern District of Texas.
Earlier this year, the CFPB published a report which revealed that payday lenders were using dishonest practices and misleading consumers into paid payment plans when more cost-effective options were often available.