Cash America, a payday lender and financial services company, will pay up for ripping off military members and their families who turned to the company when they were strapped for cash.
Cash America will pay back as much as $14 million because of illegal overcharges and robo-signing.
The Consumer Financial Protection Bureau (CFPB), in its first enforcement action against a payday lender, ordered Texas-based Cash America to refund money to military members and their families and pay a $5 million dollar fine for destroying records.
The CFPB review of Cash America’s transactions found the company violated the Military Lending Act when it charged 300 service members or their dependents more than the legally allowed 36 percent interest rate.
In addition, employees at Cash America’s debt collection subsidiary in Ohio, Cashland Financial Services Inc., illegally manually stamped attorney signatures on legal pleadings, military-status affidavits, and consumer account paperwork without reviewing them.
This is considered robo-signing and is against the law because it doesn’t allow a thorough check to make sure the documents are properly prepared and contain accurate information.
As part of the deal with the CFPB, Cash America voluntarily repaid about $6 million to military borrowers and victims of the robo-signing practices.
Through today’s CFPB order, they have committed to offer an additional $8 million to consumers, for a total refund of up to $14 million.
Consumers who were subject to debt collection lawsuits in the state of Ohio from 2008 through January 2013 are eligible. More information is available at: www.consumerfinance.gov/blog/our-first-enforcement-action-against-a-payday-lender
Cash America also dismissed pending collections lawsuits, terminated all post-judgment collections activities, cancelled all judgments obtained, and corrected information it furnished to credit bureaus for the nearly 14,000 wrongful cases filed in Ohio.