Southeast-based payday lender assessed $100,000 fine, ordered to pay refunds, for multiple violations

The federal consumer financial protection agency said Tuesday it has slapped a civil money penalty (CMP) of $100,000 against a payday lender with operations in at least seven states, mostly in the southeast U.S., for multiple violations of consumer protection laws – including failing to take steps to prevent unauthorized charges.

In addition to the CMP, officers, agents and employees (among others) of payday lender Cash Tyme are prohibited from a variety of activities related to the firm – including misrepresenting products or services offered or provided – and the firm is ordered to “refund all Unrefunded Consumers the amount of their overcharges or overpayments” identified in a comprehensive audit of the firm, also ordered by the agency.

The Consumer Financial Protection Bureau (CFPB) said its settlement with Cash Tyme (which is the operating name for the firm CMM LLC, and its wholly owned subsidiaries in the states in which it operates: Alabama, Florida, Indiana, Kentucky, Louisiana, Mississippi, and Tennessee) stemmed from violations of the Consumer Financial Protection Act of 2010 in a variety of areas. Those include:

  • Failing to take adequate steps to prevent unauthorized charges;
  • Failing to promptly monitor, identify, correct, and refund overpayments by consumers;
  • Making collection calls to third parties named as references on borrowers’ loan applications that disclosed or risked disclosing the debts to those third parties, including to borrowers’ places of employment as well as to third parties who were themselves harassed by such calls;
  • Misrepresenting that it collected third-party references from borrowers on loan applications for verification purposes, when in fact it was using that information to make marketing calls to the references; and
  • Advertising unavailable services, including check cashing, phone reconnections, and home telephone connections, on the storefronts’ outdoor signage where such advertisements contained information that was likely to be deemed important by consumers and likely to affect their conduct or decision regarding visiting a Cash Tyme store.

The agency also said that Cash Tyme failed to provide initial privacy notices to borrowers (as required under the Gramm-Leach-Bliley Act and Regulation P, regarding privacy of consumer financial information).

In addition, the CFPB said the firm violated the Truth in Lending Act and Regulation Z “when it failed to include a payday loan fee charged to Kentucky customers in the annual percentage rate (APR) in loan contracts and advertisements, and rounded APRs to whole numbers in advertisements; and when it published advertisements that included an example APR and payment amount that was based on an example term of repayment, without disclosing the corresponding repayment terms it had used to calculate that APR.”

Consumer Financial Protection Bureau Settles with Cash Tyme