Payday Lender to Refund $5 Million

If you ever felt strapped for cash and were tempted to take a payday, or short-term, loan, you know what happens next. Interest rates spiral out of control, you may borrow a second or third time and you end up owing much more than you ever thought you would.

So it’s welcome news that the Consumer Financial Protection Bureau (CFPB) cracked down on ACE Cash Express, one of the largest payday lenders in the U.S. The bureau found the company’s 2011 training manual offers an outrageous example of how it lures consumers into loan after loan.

The CFPB says a 2011 ACE training manual describes the way the company operates.

According to the CFPB a training manual graphic says, “Consumers begin by applying to ACE for a loan, which ACE approves. Next, if the consumer “exhausts the cash and does not have the ability to pay,” ACE “contacts the customer for payment or offers the option to refinance or extend the loan.” Then, when the consumer “does not make a payment and the account enters collections,” the cycle starts all over again—with the formerly overdue borrower applying for another payday loan.”

The CFPB charges ACE used these illegal tactics:

  • Harassed borrowers.
  • Falsely threatened lawsuits.
  • Falsely threatened criminal prosecution.
  • Created a false sense of urgency about repayment so that people would borrow again.

Borrowers victimized by these payday loans will get something back. ACE will pay $5 million in refunds and pay a $5 million penalty.

The company based  in Irving, Texas offers payday loans, check-cashing services, title loans, installment loans, and other consumer financial products and services online. It also operates 1,500 retail storefront operations in 36 states and the District of Columbia. 

CFPB Director Richard Cordray said, “This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back.



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Barbara Nevins Taylor

As the winner of 22 Emmy Awards and a slew of journalism honors and awards, I created to give you the straight story about complicated stuff. Tell us what you want to know and we'll get you the answers.