Education News Simulator Your Money Advisors Academy News Personal Finance News CFPB Sues ACE Cash Express, Alleging Concealment of Free Repayment Plans The agency further states they believe that the company that lends money to payday lenders unlawfully removed customer funds. By Ben Luthi Published July 14, 2022 The Consumer Financial Protection Bureau (CFPB) filed a lawsuit on Tuesday in the case against ACE Cash Express. The federal agency claims that the payday lender has raked in around $240 million or more in charges for reborrowing from borrowers who were eligible for repayment plans and also lied about the number of times it attempted to debit funds from the accounts of loanees’ banks. Important Takeaways The CFPB has sued payday lender ACE Cash Express for charging infractions and making unlawful withdrawals from bank accounts. The federal agency asserts that it is the loan provider’s repeated offender, citing a law enforcement investigation in 2014. The action led to an amount of $10 million in penalties, as well as Refunds to borrowers. The CFPB seeks monetary relief for consumers, injunctive relief, civil penalties, and disgorgement or compensation for unjust gains. The CFPB’s Lawsuit Against ACE Cash Express ACE Cash Express is a payday lender that also offers title loans including check cashing bill pay and an array of other financial services.1 However, the way the lender handles payday loans is what brought to a lawsuit brought by the CFPB. The federal agency alleges the lender is in violation of federal laws. Particularly: Paying off free plans: In 10 states, customers are eligible to one repayment plan at no cost each year. They can pay four equal installments instead one lump sum. This comes with no additional charges or interest. Instead of making the borrowers aware of this possibility, ACE Cash Express told clients that their only options are short grace periods or a refinance with a fee. The CFPB says that the lender generated at least $240 million in fees from these borrowers since 2014. Paying for money illegally: In several states payday loan contracts state that the lender has the ability repay the loan up to three times. However, the CFPB alleges that ACE Cash Express has made an illegal fourth withdrawal of at least 3,000 times since 2016 which has resulted $1.3 million in money that was debited in a fraudulent manner. 2 The CFPB also cites an enforcement action that it initiated at ACE Cash Express in 2014 in which it ordered the payday lender to refrain from dragging consumers into cycle after cycle of debt as well as to stop other illegal debt collection practices.3 The lender claimed in a press release that the lawsuit is nonsensical, claiming that improper withdrawals only affected 0.028 percent of the borrower population and the fact that more than 140,000 customers have used the payment plan option and arguing that consumers can be aware of that option.4 Sponsored Reliable, Simple, Innovative CFD Trading Platform Are you searching for a reliable CFD trader? As Germany’s No. CFD Provider (Investment Trends for 2022) Plus500 is a CFD licensed service whose platform is secure through SSL. 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How it works, How to Get One, and legality The term payday loan is a type of short-term borrowing in which a lender will offer credit with a high interest contingent on your earnings. more Student Debt Definition Student debt refers to loans to cover the tuition fees at college that become due once the student is finished or leaves school. More Regulation B (Reg B) in the Equal Credit Opportunity Act (ECOA) Regulation B spells out the rules that lenders must follow when they process and obtain credit information. more Consumer Financial Protection Act The Consumer Financial Protection Act of 2010 created the Consumer Financial Protection Bureau (CFPB). More What is What is Equal Credit Opportunity Act (ECOA)? Goal The Equal Credit Opportunity Act (ECOA) is a federal civil rights law that forbids lenders from denying credit to a person based on any factor unrelated directly to the person’s financial capacity to repay. 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