On December 16, 2016, the Consumer Financial Protection Bureau (CFPB) announced that it entered into a consent order relating to a Seattle-based payday lender and check-cashing company’s allegedly deceptive online advertisements and collection letters. The consent order alleges that the company violated sections 1031(a) and 1036(a)(1)(B) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1)(B), and the Electronic Funds Transfer Act (EFTA), 15 U.S.C. § 1693e, and its implementing regulation, 12 C.F.R. § 1005.10(b) (Regulation E).
The order concerns the company’s deceptive acts and practices relating to online advertisements about the cost of tax-refund check-cashing services, the repossessions of vehicles belonging to consumers with delinquent unsecured installment loans, and the company’s failure to obtain written authorization for preauthorized electronic funds transfers (EFTs). The CFPB alleged that the company offered to cash tax refund checks for “1.99,” but charged 1.99 percent, not $1.99 as the advertisements purportedly implied. CFPB also claimed that the company failed to obtain preauthorization for over 700 EFTs, and that it mailed hundreds of collections letters threatening repossession of vehicles for failure to make past due payments.
The order requires that the company pay $255,000 in redress to consumers who paid the company for its check-cashing service, who received one or more deceptive collection letters, or whose financial institutions charged them for unauthorized EFTs. The company also must pay a $250,000 civil penalty, cease its deceptive practices, and obtain preauthorization for any future EFTs.