Pilfering money from check-cashing transax earns company $200k penalty, order to pay restitution

Fine 'fell fall short' of what former director was seeking: Reuters

Improperly seizing money from consumers during check-cashing transactions earned a Tennessee company a $200,000 penalty and an order to pay restitution of $32,000, the federal consumer financial protection bureau said Wednesday.

In a release, the Bureau of Consumer Financial Protection (BCFP, formerly known as the CFPB) said Cash Express LLC of Cookeville, Tenn., will pay the restitution to consumers and the civil money penalty (CMP). Cash Express, the bureau said, owns and operates approximately 328 retail lending outlets in Tennessee, Kentucky, Alabama, and Mississippi.

Reuters reported Wednesday afternoon that sources told the news service that the penalty and restitution order “fell fall short” of punishments sought by the former CFPB Director Richard Cordray, who resigned nearly a year ago (and was replaced, on an acting basis, by Office of Management and Budget Director John “Mick” Mulvaney).

According to Reuters, Cordray had sought a fine of $3 million, Reuters said three sources familiar with the move told the news service.

According to the consent order between the bureau and Cash Express, BCFP found that Cash Express violated federal consumer protection law “by abusively withholding funds during check-cashing transactions to satisfy outstanding amounts on prior loans, without disclosing this practice to the consumer during the initiation of the transaction.”

Additionally, the order stated, the company deceptively threatened in collection letters that it would take legal action against consumers, even though the debts were past the date for suing on legal claims, “and it was not Cash Express’s practice to file lawsuits against these consumers.”

The agency also said it found that Cash Express violated federal law by misrepresenting that it might report negative credit information to consumer reporting agencies for late or missed payments, when the company did not actually report this information.

Cash Express and subsidiaries are barred under the order from automatically taking money from check-cashing transactions unless certain conditions are met, the bureau said. The company is “further barred from making misrepresentations about its consumer reporting activities and its intention or likelihood of filing suit to collect a debt,” the agency said.

Bureau of Consumer Financial Protection Settles with Cash Express