Cash America has been ordered to pay $14 million in refunds after illegally signing court documents in debt collection lawsuits, and $5 million in fines for violating the Military Lending Act and destroying client information. They violated the Act by illegally overcharging service members and their families. The Consumer Financial Protection Bureau (CFPB) discovered these violations after routine examinations. It was also discovered that Cash America destroyed records in advance of the examination.
“We fully cooperated with the CFPB in connection with its examination of our business,” said Daniel R. Feehan, Cash America International, Inc. Chief Executive Officer and President. “Now that we have completed the initial CFPB review process and entered into this settlement, we will continue to focus on serving our customers while working to develop additional compliance programs as required by the CFPB.”
Cash America has over 900 locations across the United States and Mexico offering pawn loans and cash advances, making them one of the largest payday lenders in America.
In addition, the company’s subsidiary, Cashland Financial Services, operating in Ohio, authorized employees to manually stamp signatures on legal pleadings, balance-due and military-status affidavits, without reviewing them and to obtain judgments against customers, resulting in the illegal robo-signing violations.
According to the enforcement order, the Military Lending Act was violated by Cash America when the CFPB found instances of active-duty service members being charged more than 36 percent interest on payday loans.
The agency also discovered that the company directed employees to limit information provided to the federal supervisors, destroy documents and delete recorded calls with consumers.
“This action should send several clear messages: First, robo-signing practices are illegal wherever they occur, and they need to stop — period,” CFPB Director Richard Cordray said in a conference call with reporters. “Second, violations of the Military Lending Act harm our service members and will be vigorously policed. Third, the bureau will detect and punish entities that withhold, destroy or hide information relevant to our exams.”
The CFPB began its supervision of payday lenders in January 2012 and continues to assist consumer financial markets by effectively creating rules and fairly enforcing them.
All complaints and problems with payday loans can be submitted online http://www.consumerfinance.gov/complaint/ or by calling (855) 411-2372.
Iman Boussaada is the Corporate Development Manager and Managing Editor of Compass at Chartwell Compliance. Ms. Boussaada previously worked in the Canadian High Finance Sector, dealing with a large volume foreign exchange, FIRMA Foreign Exchange. Please contact Iman Boussaada at firstname.lastname@example.org.