CFPB Fines Payday Lender $1.3M For Unfair Collection Tactics

The Consumer Financial Protection Bureau has assessed $1.3 million in fines and restitution to a payday and title lender for, among other infractions, calling third parties and disclosing the existence of delinquent debts and calling consumers at their places of employment after being told that the consumers could not receive calls at work.

A copy of the Consent Order against Cottonwood Financial, which does business as Cash Store, can be accessed by clicking here.

Cash Store will repay $287 thousand dollars to consumers who were deceived by television ads and telemarketing calls from the lender and pay a ciil money penalty of $1.1 million.

The lender was accused of violating the Fair Credit Reporting Act by failing to maintain adequate policies and procedures related to how it furnished information to the credit bureaus, the Truth in Lending Act, and the Consumer Financial Protection Act. Cash Store operates more than 300 retail locations in seven states across the country.

Individuals applying for loans from the lender were required to include the contact information for two references. If the individual stopped making payments on the loan, the lender would make “numerous” calls to those references and either disclose or risk disclosing the existence of a debt. Labeling the activities as “unfair” practices, the CFPB noted that neither the individuals taking out the loan nor those people listed as references “did not know whether, when, or how these calls might occur and had no control” over the use of these “collection tactics.”

Along with paying the fine, Cash Store is also permanently barred from engaging in collection tactics that “harass or annoy” individuals, which includes “calling consumers repeatedly with the intent to harass or annoy, calling consumers after requests to stop, and repeatedly calling consumers’ places of work after requests to stop”; continuing to place calls to someone after that person has asked Cash Store to cease making contact; calling an individual at his or her place of work if asked not to’; disclosing the existence of a debt when speaking with third parties.

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