Charged with concealing free repayment plans from struggling borrowers – which allegedly resulted in borrowers paying up to thousands in reborrowing fees – a Texas-based payday lender has been sued by the federal consumer financial protection agency, the agency said Tuesday.
In a release, the Consumer Financial Protection Bureau (CFPB) said it has sued ACE Cash Express of Irving, Texas, for concealing the no-cost repayment plans from borrowers and improperly withdrawing consumers’ funds. The agency further alleged that the firm’s actions generated at least $240 million reborrowing fees by keeping the borrowers in debt and in the dark, and that ACE “lied to borrowers about the number of times it would attempt to debit their bank accounts for repayment of loans and fees.”
According to the CFPB, ACE (which changed its corporate name to “Populus Financial Group” in 2019 but retained the ACE Cash Express brand as one of its core financial service offerings) primarily serves low-income borrowers who frequently refinance, rollover, or otherwise extend their loans beyond the original repayment term. ACE has approximately 979 stores in 22 states and the District of Columbia. Since 2006, ACE has been owned by JLL Partners, a private equity firm, the CFPB said. The bureau also noted that the firm, because of a 2014 CFPB enforcement action, paid $10 million in penalties and borrower refunds for using illegal debt-collection tactics, and the company is still bound by the order from that case. The CFPB referred to ACE as a “repeat offender.”
In its complaint, the CFPB said that since 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, the firm 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.
Consumers have been harmed, the CFPB alleged, after ACE concealed free repayment-plan options and funneled borrowers into costly reborrowing, and withdrew money from borrowers’ bank accounts in violation of contracts.
The bureau said its action seeks monetary relief for harmed consumers, disgorgement or compensation for unjust gains, injunctive relief, and civil money penalties.