by In its first enforcement action against a payday lender, the Consumer Financial Protection Bureau (CFPB), ordered Cash America International, Inc. to refund consumers in the amount of $14 million and pay a fine of $5 million, as a result of its violations of consumer financial protection laws. Cash America, a publicly traded financial services company out of Fort Worth, Texas, is one of the largest short-term, small-dollar lenders in the country.
Deriving its authority from the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB began its oversight of payday lenders in January, 2012. The CFPB announced the action in a press release dated November 20, 2013, marking the Bureau’s first public enforcement action for failure to comply with the CFPB’s supervisory examination authority.
The violations include robo-signing by Cash America’s Ohio subsidiary, Cashland Financial Services, Inc. Cash America also extended payday loans to service members at a rate in excess of the 36 percent limit set by the Military Lending Act. Finally, Cash America was found to have impeded the CFPB routine examination by destroying records, deleting recorded phone calls with consumers, instructing employees to limit information provided to the CFPB, and withholding a report related to robo-signing.
As a result of its illegal practices, Cash America has voluntarily refunded approximately $6 million and has committed $8 million more to military borrowers and to Ohio victims who suffered from the robo-signing practices between 2008 and January 2013. Cash America has also dismissed pending lawsuits, terminated post-judgment collection activities, and cancelled all judgments in nearly 14,000 wrongful cases filed against consumers in Ohio. On top of these compensatory measures, Cash America has been ordered to pay a $5 million civil penalty. Finally, Cash America will develop and implement a plan to improve compliance with consumer financial protection laws.
CFPB Director, Richard Cordray, said of the action that it, “brings justice to the Cash America customers who were affected by illegal robo-signing, and shows that we will vigilantly protect the consumer rights that service members have earned. We are also sending a clear message today to all companies under our watch that impeding a CFPB exam by destroying documents, withholding records, and instructing employees to mislead examiners is unacceptable.”