On Tuesday, the Consumer Financial Protection Bureau (CFPB or Bureau) announced that it reached a settlement with Cash Tyme, a payday retail lender. Per the consent order, Cash Tyme must pay a $100,000 fine, split into two $50,000 payments.
The allegations against Cash Tyme included, among other things, the following:
- Failing to have an adequate process to prevent unauthorized charges to borrowers. Specifically, having “no reliable means of preventing a subsequent ACH debt from the consumer’s account for the full amount of the loan, even though the full amount was no longer due.” This resulted in the collection of at least $21,800 that consumers did not owe.
- Failing to have adequate processes to monitor, identify, correct, and refund overpayments by consumers. A manual process was in place, but it often led to errors.
- Routinely making collection calls to third parties listed as references on the consumers’ applications until the consumer paid his loan, risking third party disclosure.
- Notating requests not to call in the consumers’ files rather than keeping a do-not-call list, which led to errors.
- By using references listed on consumers’ applications, which stated that these references would only be used for verification purposes, to make telemarketing leads.
- Advertising unavailable services on storefronts that were likely to lead a consumer to decide whether or not to visit a Cash Tyme store.
- Failing to adequately display the Annual Percentage Rate on its advertisements.
In addition to paying the fine, Cash Tyme must implement adequate processes related to unauthorized charges, ACH payments, and monitor for overcharges. Cash Tyme must also amend their advertisements to correctly state the Annual Percentage Rate, make its privacy notice clear and conspicuous, and refund all un-refunded customers.