Payday lender ordered to pay $19 million

One of the country’s largest payday lenders is being ordered to pay fines and refunds totaling $19 million over charges that it abused consumers and destroyed documents related to its work.

The Consumer Financial Protection Bureau (CFPB) claimed that some Cash America facilities had been ignoring due diligence rules for five years, leading about 14,000 people to pay money in cases that relied on improper court filings.

The CFPB is also claiming that the company illegally overcharged more than 300 members of the military, and that it impeded the watchdog agency’s investigation by destroying records and paperwork.

“This action should send several clear messages to everyone under the jurisdiction of the Consumer Bureau,” CFPB Director Richard Cordray told reporters on Wednesday. 

According to the agency’s claim, Cash America offices in Ohio routinely engaged in “robo-signing,” whereby documents were prepared in manners not prescribed by normal court rules.

“This is the same kind of sloppiness and corner-cutting that has been exposed in the field of mortgage servicing,” Cordray added.

The company also made hundreds of loans to service members with annual rates that exceeded a legal cap of 36 percent. Finally, when CFPB staff went to investigate the company, they found that many documents had been destroyed, despite the agency’s instructions that Cash America preserve them.

Cash America has already begun paying $6 million in refunds to its consumers, but is being ordered to pay an additional $8 million. On top of that, it is also being ordered to pay a $5 million fine, and could be subject to increased oversight.

“Issuing a consent order such as this one is not the last step that we take,” said Steve Antonakes, the deputy director of the CFPB. “There are rigorous monitoring requirements after that order is taken.”

Wednesday’s action against Cash America is the bureau’s first against a payday lender, but it has steadily begun monitoring companies’ payday lending practices.

Earlier in the month, it asked consumers to let it know about problems they have with payday lending firms. 

The lending companies typically offer small, short-term loans, but consumer advocates have long worried that they can take advantage of borrowers and force them to roll over their loans.