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CFPB sues ACE Cash Express for concealing no-fee redemption plans and improperly withdrawing consumer funds

WASHINGTON DC – The Consumer Financial Protection Bureau (CFPB) today filed a lawsuit accusing payday lender ACE Cash Express of concealing free repayment plans from troubled borrowers. Due to ACE’s illegal practices, individual borrowers have paid hundreds or thousands of dollars in reborrowing fees, when they were in fact eligible for free repayment plans. These practices generated at least $240 million in fees for ACE, while putting borrowers in debt. The CFPB also alleges that ACE lied to borrowers about the number of times it would attempt to debit their bank accounts for repayment of loans and fees. In a 2014 CFPB enforcement action, ACE paid $10 million in penalties and refunds to borrowers for using illegal debt collection tactics, and the company is still bound by the order in that case.

“Deceit and misdirection have allowed ACE Cash Express to pocket hundreds of millions of dollars in reborrowing fees,” CFPB Director Rohit Chopra said. “Today’s trial is another example of the CFPB’s emphasis on holding repeat offenders accountable.”

ACE Cash Express is a financial services company headquartered in Irving, Texas. In 2019, ACE changed its corporate name to Populus Financial Group Inc., while continuing to brand ACE Cash Express as one of the group’s core financial services offerings. The company offers a variety of financial products, including high-cost, low-cost payday loans and title loans, as well as bill payment, check cashing and prepaid debit card services. Small loan products are generally structured to be short-term, one-time payment loans with three-digit annualized interest rates. ACE primarily serves low-income consumers, and its borrowers frequently refinance, refinance, or extend their loans beyond the original repayment term. ACE has approximately 979 stores in 22 states and the District of Columbia. Since 2006, ACE has been owned by JLL Partners, a private equity firm.

ACE is also a repeat offender of consumer financial protection laws. In 2014, the CFPB found that ACE was using illegal debt collection tactics to create a false sense of urgency to induce late borrowers to borrow repeatedly. ACE would encourage overdue borrowers to temporarily repay their loans and then quickly re-borrow from the company. Even after borrowers told ACE they could not afford to repay their loans, the company continued to pressure them to take on more debt. Borrowers would pay new fees each time they take out another payday loan from ACE.

Following enforcement action by the CFPB in 2014, ACE used different tactics to entice consumers to borrow again. Borrowers in 10 states had the contractual right to one free repayment plan per year. Under the free repayment plan, borrowers should pay their outstanding balances in four equal installments over their next four paydays, rather than owing a lump sum. They would also not have to pay any additional fees or interest. As alleged in the complaint, ACE used tactics designed to trick borrowers into rollovers and refinances instead of free repayment plans. The result was that instead of simply paying off the outstanding balance, borrowers were faced with repeated charges of the same three-digit annualized interest rate they were initially charged.

The CFPB alleges that since July 10, 2014, ACE has received more than $240 million in fees from hundreds of thousands of customers who were eligible for a free reimbursement plan. And, since January 2016, he has made at least 3,000 unauthorized debit card withdrawals, resulting in the illegal debiting of at least $1.3 million from at least 3,000 borrowers. As alleged in the complaint, ACE specifically harmed consumers by:

  • Conceal free repayment plan options and funnel borrowers into costly reborrowing: In many cases, since at least 2014, ACE has advised borrowers who have expressed an inability to repay their current ACE loans that the only options available to them are a short grace period or a paid refinance. ACE used deceptive language and cascading scripts to trick borrowers into refinancing loans. Many borrowers didn’t know there were free repayment plans, didn’t know they wouldn’t have to pay extra for free repayment plans, and didn’t know that signing up for repayment plans free would potentially save them from having to make a payment before a loan matures. regularly scheduled due date.
  • Withdraw money from borrowers’ bank accounts in violation of contracts: In many states, borrowers have signed contracts allowing ACE to make three attempts to withdraw repayment funds from borrowers’ bank accounts. However, for thousands of borrowers, ACE withdrew money through a fourth withdrawal. ACE’s actions caused affected borrowers to lose funds and potentially the ability to pay other bills.

Enforcement measures

Under the Consumer Financial Protection Act, the CFPB has the power to take action against institutions that violate consumer financial protection laws, including by engaging in unfair, deceptive or abusive acts or practices.

The CFPB seeks monetary redress for aggrieved consumers, restitution or compensation for unfair gains, injunctive relief, and civil monetary penalties. The complaint is not a final finding or determination that the defendants violated the law.

Read today’s complaint.

In April, the CFPB released a report on no-fee extended payment plans, which must be offered to borrowers in the majority of states that do not ban payday loans. CFPB research has suggested that deceptive industry practices can lead to costly reborrowing cycles.

Consumers who wish to file a complaint about ACE Cash Express or any other consumer financial product or service may file a complaint with the CFPB online or by calling (855) 411-CFPB (2372).

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The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces federal consumer finance law and ensures that markets for consumer financial products are fair, transparent and competitive. For more information, visit consumerfinance.gov.