The Consumer Financial Protection Bureau is suing the payday lender Ace Cash Express, labeling it a “repeat offender” and claiming it funneled customers into costly reborrowing.
The Irving, Texas, company also concealed free repayment plans from borrowers and withdrew money from borrowers’ bank accounts in violation of their contracts, the bureau said.
“Deception and misdirection allowed Ace Cash Express to pocket hundreds of millions of dollars in reborrowing fees. … Today’s lawsuit is another example of the CFPB’s focus on holding repeat offenders accountable,” CFPB Director Rohit Chopra said Tuesday in a
Ace’s products included small-dollar payday and title loans. It primarily serves low-income borrowers who frequently refinance, roll over or extend their loans beyond the original repayment term. In 2018
This isn’t the first time the CFPB has sued Ace. A suit it filed against the lender in 2014 alleged that it lured borrowers into a “cycle of debt” through illegal debt-collection tactics and created a false sense of urgency to repay, according to a
In a statement, Ace said that it "vehemently disagrees with the CFPB's claims of deception, unfairness and abuse," noting that the CFPB's cited instances of improper withdrawals "relates to approximately 0.028% of ACE's loan transactions during the applicable time period" and that the firm had already "refunded over $670,000 to loan customers they will never be required to pay back."
"Over 140,000 ACE customers have availed themselves of the payment plan option since changes were implemented in 2013, yet the CFPB wrongly alleges ACE hid the payment plan option from borrowers and steered them to refinance," Ace said in a statement. "The facts reflect customers were aware of the voluntary payment plan option because of disclosures in their loan agreements, and language on ACE's website and in other communications."
The bureau claims in the new lawsuit that since 2014 Ace has collected over $240 million in fees from customers through misleading language to convey that the only options available to customers unable to repay their loans were a short grace period or fee-based refinancing. For instance, the company failed to tell borrowers in some states that their contracts allowed one free repayment plan per year, the agency said.
The bureau also alleges that the company violated contracts by making additional attempts to withdraw repayment funds from customers’ bank accounts, beyond the three allowed in borrowers’ contracts.
The CFPB is seeking monetary relief for harmed consumers, compensation for the company’s “unjust gains,” injunctive relief and civil money penalties. The suit was filed in the U.S. District Court for the Northern District of Texas.
Earlier this year, the CFPB published a
This story has been updated to include a comment from Ace.
