Cracking down on payday lenders

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(NNPA)—Just in time for the holiday season, three federal regulators have taken two separate actions against payday lending. One seeks to remedy outrageous wrongdoing by refunding money to past customers. The other will protect existing or new borrowers from further financial exploitation. By actively righting wrongs and implementing common-sense reforms, these regulators offer consumers prospects for a happier holiday season.

On Nov. 20, in its first enforcement action against a payday lender, the Consumer Financial Protection Bureau secured an agreement from Cash America International Inc. to reimburse $14 million to approximately 14,000 consumers. The refunds are a result of “robo-signing” debt collection documents and also overcharging on payday loans given to members of the military or their families.  Affected consumers will receive a full refund. Additionally, Cash America will also pay a $5 million fine for those violations and other misconduct.

CFPB’s regulatory action is particularly significant because Cash America is one of the largest and most influential in the industry. In fact, Dan Feehan, its CEO, said at a 2007 Jeffries Financial Services conference, “[T]he theory in the business is [that] you’ve got to get that customer in, work to turn him into a repetitive customer, long-term customer, because that’s really where the profitability is.”

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