CFPB Expands Its Enforcement Efforts Against Payday Lending


In November, 2013, the Consumer Financial Protection Bureau announced its first enforcement action against a payday lender. Cash America International was fined $5 million and was ordered to refund $14 million to its borrowers due to violations of the Military Lending Act. Recently, the CFPB took action against one of the nation’s largest payday lenders, ACE Cash Express, “for inducing payday borrowers into a cycle of debt”, according to CFPB Director Richard Cordray.

ACE agreed to pay a civil penalty of $5 million, and to pay up to $5 million in refunds to its customers. Although ACE maintains that the practices that the CFPB found illegal ceased in 2012, and involved a very small number of its borrowers, “ACE used false threats, intimidation, and harassing calls to bully payday borrowers” according to Director Cordray.

The CFPB found that ACE engaged in several unlawful collection practices, including: 1) threatening to sue or criminally prosecute if borrowers did not make payments, even though ACE did not actually sue consumers or bring criminal charges against them for non-payment; 2) threatening to charge extra fees and to report borrowers to credit reporting agencies, even though the debt collectors had no authority to charge collection fees or to report non-payment to credit bureaus; and 3) making an excessive number of harassing collection calls, not only to borrowers, but also to their employers and relatives. The CFPB found that ACE used these tactics to pressure borrowers to take on more debt, which resulted in new fees to ACE. According to Director Cordray, “ACE was relentlessly overzealous in its pursuit of overdue consumers…. Debt collection tactics such as harassment and bullying take a profound toll on people – both financially and emotionally. The Consumer Bureau bears an important responsibility to stand up for those who are being wronged in this process.”

ACE maintains that “over the last two years, ACE has cooperated fully with the CFPB” and has taken voluntary action to improve its regulatory compliance.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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