Consumer Bureau alleges "deception and misdirection," seeks money damages
Payday lender ACE Cash Express is facing a lawsuit from the Consumer Financial Protection Bureau (CFPB) for alleged misdeeds including concealing free repayment plans and unlawfully debiting funds from customer bank accounts. The CFPB alleges that the practices generated at least $240 million in additional fees for ACE while keeping customers in a cycle of debt.
In a statement, the CFPB said lawsuits like this one help hold financial wrongdoers accountable:
“Deception and misdirection allowed ACE Cash Express to pocket hundreds of millions of dollars in reborrowing fees,” said CFPB Director Rohit Chopra. “Today’s lawsuit is another example of the CFPB’s focus on holding repeat offenders accountable.”
This suit is not the first time ACE has found itself on the wrong side of the law due to its lending tactics.
In 2014, the CFPB found that ACE used illegal debt-collection tactics to create a false sense of urgency to lure overdue borrowers into repeat borrowing. ACE would encourage overdue borrowers to temporarily pay off their loans and then quickly re-borrow from the company. That case resulted in a $10 million fine for ACE.
Despite the 2014 lawsuit and fine, ACE continued to use deceptive tactics, the CFPB alleges.
Specifically, the CFPB says:
"Since July 10, 2014, ACE has received more than $240 million in fees from hundreds of thousands of customers who were eligible for a free repayment plan. And, since January 2016, it has made at least 3,000 unauthorized debit-card withdrawals, which resulted in at least $1.3 million being illegally debited from at least 3,000 borrowers."
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