CFPB Files Complaint Against Payday Lending Company for Alleged Deceptive Practices
On May 11, the CFPB filed a complaint for alleged violations of the Consumer Financial Protection Act of 2010 (CFPA) against a Mississippi-based company offering cash checking services and payday loans. Regarding the company’s check cashing services, the CFPB alleges that the company violated state consumer protection laws by (i) explicitly forbidding employees from disclosing check cashing fees to consumers and providing new employees with a training presentation instructing them to “NEVER TELL THE CUSTOMER THE FEE”; and (ii) telling consumers that check transactions could not be canceled or that the process to reverse transactions would be lengthy, when neither was the case. The CFPB’s complaint further contends that the company’s payday lending practices differ from other companies’ practices in that it provides “multiple two-week loans over the course of the month” as opposed to providing 30-day loans to monthly consumers. The CFPB’s complaint states that, “[b]y borrowing from [the company], these consumers pay more in fees for the same or less net cash received during the month. Nevertheless, [the company] has deceptively represented to consumers that borrowing from [it] is more financially beneficial than, or at least financially equivalent to, taking out a 30-day loan from one of [its] competitors.” Further, the complaint states that consumers using the company’s services would often overpay and, from at least 2011 until 2014, the company failed to take “affirmative steps to notify consumers when they made an overpayment or to refund overpayments to consumers.”
The CPFB’s complaint, which also names one other company that provides payday loans and check cashing services in Mississippi and the president and sole owner of both companies, seeks monetary relief, injunctive relief, and penalties.