The CFPB’s Cognitive Dissonance
Bureau Fines Latest Payday Lender Caught Abusing Consumers Yet Still Plans to Loosen Payday Rules
WASHINGTON, D.C. — Today Trump’s CFPB announced a $100,000 settlement with payday lending company Cash Tyme as penalty for numerous violations of the Consumer Financial Protection Act of 2010 including: failing “to take adequate steps to prevent unauthorized charges to customers” and failing to refund overpayments by consumers. While it is the latest example of a payday lender getting caught sidestepping the law to take advantage of consumers, is it also the latest reminder why it is a reckless idea for the Kraninger-led CFPB to go forward with its plans to gut regulation of the payday industry.
“At this point it’s a ‘dog bites man’ story when a payday lender is busted for illegally ripping off consumers,”said Jeremy Funk, spokesman for Allied Progress. “The real story is how Trump’s CFPB can see that this is an industry that regularly thumbs its nose at the law yet at the same time believes consumers should have fewer protections from shady companies like Cash Tyme.”
Added Funk: “On the heels of reports last week that two major payday lending companies and a subprime auto lender put up quarterly profits collectively exceeding $200 million, a payday lender getting off with a $100,000 fine for a stack of violations seems meager — and not much of a deterrent for other lenders considering engaging in abusive and deceptive practices. It appears Director Kraninger is happy to continue her predecessor’s practice of giving big industry lawbreakers the ‘Mulvaney discount’”.
WHAT YOU NEED TO KNOW:
The Trump/Kraninger CFPB Fined Payday Lender Cash Tyme $100,000 But Didn’t Require It To Pay Restitution To Harmed Borrowers After The Company Allowed Unauthorized Charges To Customers, Used Third-Party References For Marketing Calls, And Advertised Services It Did Not Offer
The CFPB Fined Payday Lender Cash Tyme $100,000 For Failing To “Take Adequate Steps To Prevent Unauthorized Charges To Customers.” “The Consumer Financial Protection Bureau fined Indiana-based payday retail lender Cash Tyme $100,000 on Tuesday for violating the Consumer Financial Protection Act of 2010. The CFPB said in its order that the company had failed to take adequate steps to prevent unauthorized charges to customers, failing to promptly monitor, identify, correct, and refund borrower overpayments and making harassing collection calls to third-parties named as references on borrowers’ loan applications.” [Francine McKenna, “CFPB fines payday lender Cash Tyme $100,000 for unauthorized charges and other violations,” MarketWatch, 02/05/19]
- Cash Tyme Allegedly Used Third-Party References For Marketing Purposes And “Advertised Services It Did Not Offer.” “Cash Tyme also told borrowers it collected third-party references from borrowers on loan applications for verification purposes only, when in fact it was using that information to make marketing calls to the references. Cash Tyme also advertised services it did not offer, including check cashing, phone reconnections, and home telephone connections. Cash Tyme consented to the settlement without admitting or denying the findings.” [Francine McKenna, “CFPB fines payday lender Cash Tyme $100,000 for unauthorized charges and other violations,” MarketWatch, 02/05/19]
The CFPB Didn’t Order Cash Tyme To Pay Restitution To Harmed Borrowers. “The payday lender, which operates 37 stores in seven states, was ordered to pay a $100,000 fine to the CFPB but was not required to pay restitution to borrowers.” [Kate Berry, “CFPB fines payday lender Cash Tyme for overcharging customers,” American Banker, 02/05/19]
CMM LCC (Which Operates As Cash Tyme) Had “$2.8 Million In Assets At The End Of 2017.”“The company is a unit of CMM LLC, which had $2.8 million in assets at the end of 2017, the CFPB said.” [Kate Berry, “CFPB fines payday lender Cash Tyme for overcharging customers,” American Banker, 02/05/19]
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