The Consumer Financial Protection Bureau on Wednesday ordered a payday lender to pay up to $19 million in refunds and fines for robo-signing court documents in debt collection lawsuits and other lending violations.
Cash America International, Inc., one of the largest short-term, small-dollar lenders in the country, was also found to have violated the Military Lending Act by illegally overcharging service members and their families.
The Fort Worth, Texas-headquartered company will pay up to $14 million in refunds to consumers, along with a $5 million fine for lending violations and for destroying records ahead of the CFPB’s investigation.
“This action 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 servicemembers have earned,” said CFPB Director Richard Cordray in a statement. “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.”
The CFPB began a routine examination of Cash America in July 2012, during which the company told employees to limit information they provided to the bureau about sales and marketing pitches, deleted recorded phone calls with consumers, and continued to shred documents after being told to stop.
Wednesday marks the CFPB’s first public enforcement action against a payday lender, first public action under the Military Lending Act, and first public action for a company’s failure to fully comply with the bureau’s supervisory examination authority.
Cash America has already voluntarily paid back around $6 million to military borrowers and victims of the robo-signing practices and through the CFPB’s order has committed to offer another $8 million in refunds to consumers. The company will also develop and implement a comprehensive plan to improve its compliance with consumer financial protection laws, including he Military Lending Act.
The CFPB’s Consent Order can be accessed here.
Written by Alyssa Gerace