A payday lender has been ordered by the Consumer Financial Protection Bureau to pay $10 million to settle claims it engaged in illegal debt collection activity.
The company, EZCORP Inc., made illegal visits to consumers at their homes and places of employment, threatened legal action, lied about consumers’ rights, and made unlawful electronic withdrawals.
EZCORP will pay $3 million in penalties and refund $7.5 million to 93,000 customers.
When the CFPB launched its investigation in July, EZCORP announced it would stop making payday loans, title loans, and installment loans in the U.S. The company made visits to consumers homes and workplaces through 2013, which is a violation of the Fair Debt Collection Practices Act because it potentially exposes consumers’ debts to third parties.
EZCORP also called the supervisors, landlords and credit references of delinquent borrowers, disclosing the debts to third parties in an attempt to obtain payment. The company also required payments to be made by pre-authorized checking account withdrawals, which is prohibited. The company often made withdrawals earlier than promised and would make three simultaneous attempts to withdraw money from accounts.
The company also told consumers they could not stop the pre-authorized withdrawals unless they made a payment or set up a payment plan, when in fact, they could revoke that option at any time.
As part of the settlement, EZCORP will also stop collections on tens of millions of dollars in defaulted debt.
A full copy of the consent order is available here
