CFPB orders short-term lenders to pay $3.5 million in redress but allows reduction; cites deceptive, unfair acts

A consent order between the consumer financial protection agency and affiliated payday and auto-title lenders working in eight states imposes a judgment of about $3.5 million in consumer redress, but the settlement announced Tuesday provides for some relief upon payment of $2 million plus a $1 civil money penalty upon demonstration of an inability to pay.

The Consumer Financial Protection Bureau (CFPB) said its settlement is with Main Street Personal Finance, Inc. and its subsidiaries – ACAC, Inc., which conducts business under the name Approved Cash Advance, and Quik Lend Inc. – referred to collectively as Approved Cash. It said the companies, which are based in Cleveland, Tenn., offer payday and auto-title loans and own and operate about 156 stores in eight different states: Alabama, Louisiana, Michigan, Mississippi, Oklahoma, South Carolina, Tennessee, and Virginia.

Approved Cash, the bureau said, provided deceptive finance charge disclosures in violation of the Consumer Financial Protection Act (CFPA) and the Truth in Lending Act (TILA), violated the CFPA and TILA by failing to refund overpayments on its loans, and violated the CFPA by engaging in unfair debt collection practices. Specifically, the bureau found that Approved Cash concealed and understated the actual finance charges of its auto-title loans, which are called auto-title pledge transactions under Mississippi state law, for more than 4,000 consumers. Consumers paid a total of over $3.5 million more than the finance charge listed in Approved Cash’s loan disclosures, the bureau said.

The CFPB also found that Approved Cash violated the CFPA’s prohibition against unfair acts or practices and TILA by retaining consumers’ overpayments on their loans for months and sometimes years instead of returning those funds to consumers; and that Approved Cash engaged in unfair debt collection practices in violation of the CFPA when it made numerous calls to consumers’ workplaces, references, and other third parties after being asked to stop, and improperly disclosed consumers’ debts to third parties or used tactics that risked such disclosure.

The consent order imposes a judgment against Approved Cash of approximately $3.5 million in consumer redress, “which amount is suspended upon its payment of $2 million of that judgment and $1 civil money penalty to the bureau based on Approved Cash’s demonstrated inability to pay,” the agency said. The CFPB noted that “assuming continued available funds,” it will work to provide full relief to eligible harmed consumers from its Civil Penalty Fund (where that $1 CMP by Approved Cash is to be deposited).

Under the consent order, Approved Cash is also prohibited from misrepresenting finance charges in its auto-title pledge transactions, requires it to ensure that consumers with credit balances over $1 are refunded timely, and prohibits it from engaging in the same unlawful debt collections practices.

Consent order

CFPB release

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