The Consumer Financial Protection Bureau (CFPB) has reached a $19 million settlement with payday lender Cash America over abusive practices such as "robo-signing," in which employees stamped a lawyer’s signature on court documents used to sue borrowers for past-due debts. This tactic, according to the CFPB, helped the company improperly make money from at least 14,397 U.S. consumers.
The settlement with Cash America is the CFPB's first with a short-term, small-dollar lender. The agency also found cases in which Cash America charged active-duty service members and their families more than the 36 percent interest rate limit set by the Military Lending Act.
Under the settlement terms, Cash America must pay up to $14 million to borrowers who were subject to faulty debt-collection lawsuits in Ohio from 2008 to January 2013; the company already has repaid about $6 million to military borrowers and victims of robo-signing. It also stopped trying to collect on debts that the CFPB determined were problematic.
Cash America additionally must pay $5 million in civil penalties and establish better compliance-management systems. “This action should send several clear messages: First, robo-signing practices are illegal wherever they occur, and they need to stop — period,” CFPB director Richard Cordray said in a conference call. “Second, violations of the Military Lending Act harm our service members and will be vigorously policed. Third, the bureau will detect and punish entities that withhold, destroy or hide information relevant to our exams.”