The Bureau of Consumer Financial Protection yesterday announced it had reached a settlement with Cash Express, LLC, a Tennessee-based payday lender, for “deceptively threatening” individuals in collection letters that it would file lawsuits against them, even though the the debts were time-barred and it did not normally file such suits anyway, and threatening to report negative information to a credit bureau when it did not normally do so.
The company will pay $32,000 in restitution to individuals and pay a civil fine of $200,000. The company has been barred from making misrepresentations in its collection letters regarding reporting information to credit bureaus or intentions to file suits in order to collect on an unpaid debt.
A copy of the consent order is available by clicking here.
When sending collection letters, the lender would sometimes include draft copies of court documents and include a deadline by which consumers had to respond in order to avoid being sued, when, in fact, the lender had only ever filed five lawsuits out of more than 11,000 letters that were sent to individuals whose debts were time-barred. Cash Express , meanwhile, filed thousands of lawsuits against individuals whose debts were not time-barred, according to the consent order.
About 150 individuals who were threatened with a lawsuit despite the debt being time-barred made payments — about $32,000 in total.
Despite not reporting information to a credit reporting agency, the lender threatened to do so in collection letters. In its letters, the lender would include language that said, “We may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report” and repeated the language at the bottom of the letter.
