Blog Enforcement Watch May 11, 2016

CFPB Brings Action Against Mississippi Pay Day Lending and Check Cashing Company

On May 11, 2016, the Consumer Financial Protection Bureau (CFPB) announced that it is taking action against a Mississippi-based check cashing and payday lending company and its owner for purportedly “tricking and trapping” customers.  According to the complaint, filed in the U.S. District Court for the Southern District of Mississippi, the defendants violated Sections 1031, 1036, and 1054 of the Consumer Financial Protection Act (CFPA) by committing abusive, deceptive, and unfair acts and practices in their payday loan and check cashing services.

Specifically, the CFPB alleged that the defendants instructed their employees to actively conceal the costs consumers would be charged to cash a check and subsequently used deceptive practices to prevent consumers from backing out of transactions.  The CFPB further alleged that the defendants made deceptive statements regarding the benefits and fees associated with its payday loans and also withheld overpayments made by consumers on those loans.

The complaint seeks civil money penalties and costs, as well as injunctive relief to terminate defendants’ purportedly unlawful practices.  The CFPB is also seeking consumer relief including consumer refunds, rescission or reformation of contracts, restitution, disgorgement, and money damages.