One of the largest U.S. payday lenders, Cash America International Inc., is preparing for a crackdown by the Consumer Financial Protection Bureau, which may file an enforcement action against the company and require it to improve certain procedures. Daniel Feehan, the firm's president and CEO, announced the possible filing during a conference call with analysts.
The action stems from a reimbursement program that the lender announced in December for Ohio customers named in legal proceedings; it also would address "compliance issues" uncovered during a 2012 CFPB examination. When announcing its reimbursement program, Cash America said it found that a "small number" of employees had filed improper paperwork in many collections proceedings in Ohio and opted to voluntarily reimburse funds. The company is negotiating an agreement with the CFPB to "resolve these issues," Feehan said. The CFPB began supervising payday lenders last year and is considering whether to issue new rules for the loans and other forms of short-term credit. Consumer advocates say this form of financing comes with excessive interest rates that can trap borrowers in debt.