CFPB Settles Lawsuit Against Tennessee Payday Loans Provider - OppLoans

CFPB Settles Lawsuit Against Tennessee Payday Loans Provider - OppLoans CFPB Settles Lawsuit Against Tennessee Payday Loans Provider CFPB Settles Lawsuit Against Tennessee Payday Loans ProviderInside Subprime: Oct 25, 2018By Lindsay FrankelThe Consumer Financial Protection Bureau (CFPB) settled a lawsuit against a Tennessee payday loan provider regarding the lender’s deceptive and abusive collection practices, which were found to violate the Consumer Financial Protection Act (CFPA). The lender was ordered to pay a $200,000 civil money penalty and forfeit about $32,000 in restitution to customers harmed by the practices. The payday loan firm is a Tennessee-based company that provides payday loans, title loans, and check-cashing services. The company has 328 payday lending storefronts across four states. The payday loan firm violated the CFPA by threatening to take legal action against customers in collection letters. These threats were considered deceptive because “it was notThe payday loan firms practice to file lawsuits against these consumers,” according to a press release. In addition, some of the recipie nts of these letters had debts past the statute of limitations for legal action. The Bureau also discovered that the payday loan firm deceived customers by lying about intents to report negative credit information. In reality, the company did not report late or missed payments to consumer reporting agencies. Furthermore, the payday lender withheld funds from customers during check cashing transactions to put towards prior loans and failed to disclose the practice to borrowers in advance of the transaction. The bureau contended that customers would likely cash their checks elsewhere if they were aware of the practice. A training document from the lender that reflects the policy stated, “First of all, dont tell the customer, I see you owe a debt from years ago and when I cash this check I have to take out what you owe because they will leave and not cash the check with you! The consent order prohibits the payday loan firm from taking funds from these transactions in the future witho ut meeting certain conditions. The lender is also barred from misrepresenting its debt collection and consumer reporting practices to borrowers. Consumer advocates say payday lenders cause financial harm to borrowers by charging high interest rates and fees that make it difficult for low-income individuals to get out of debt. Rates are particularly high in Tennessee, Alabama, and Kentucky, three of the states where the payday loan firm operates retail locations. Payday loans in Kentucky cost borrowers an average of 469 percent annual interest, according to 2016 data from Pew Charitable Trusts. The practice of charging exorbitant interest rates may not be considered abusive, as it is in compliance with the law, but even payday lenders who do not engage in deceptive practices cause harm to borrowers’ financial futures. Consumers should avoid these risky loans whenever possible. For information on predatory payday loans, check out all of our  Subprime Reports.Visit  OppLoans  on  You Tube  |  Facebook  |  Twitter  |  LinkedIn