CFPB Stops Payday Lender from Deceiving Customers and Making Unauthorized Withdrawals from their Bank Accounts
Last week the Consumer Financial Protection Bureau (CPFB) fined a payday lender for misleading consumers through deceptive online advertisements and collection letters, as well as making unauthorized withdrawals from consumers’ bank accounts. “Consumers deserve honesty and transparency from the financial institutions they rely on” said CFPB Director Richard Cordray. The CFPB’s order also requires the company to cease the illegal practices and return the money that customers overpaid for its check-cashing service, and that was illegally withdrawn from customers’ bank accounts.
Moneytree, Inc. (Moneytree) offers payday loans, check-cashing, and other services to consumers in California, Colorado, Idaho, Nevada and Washington. The CFPB’s consent order found that Moneytree violated the Dodd-Frank Wall Street Reform and Consumer Protection Act. First, Moneytree ran a deceptive online advertisement campaign between February — March 2015. Moneytree advertised a fee for their tax-refund check-cashing service was significantly lower than the fee consumers were actually charged. Second, Moneytree mailed letters to hundreds of consumers between 2014 and 2015 which threatened to repossess their vehicles if they did not make past-due payments on their installment loans, despite the fact that Moneytree had no right or ability to repossess consumers’ vehicles. Third, Moneytree withdrew money from over 700 consumers’ bank accounts without authorization.
The CFPB settlement requires Moneytree to end its illegal practices, including obtaining pre-authorization for all electronic withdrawals, to issue at least $255,000 in refunds to consumers who were wronged, and to pay a civil penalty of $250,000.
— Veronica Meffe