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Payday Lender To Pay $19 Million For Robo-Signed Collections & Overcharged Servicemembers

consumerist.com | November 27, 2013

By Chris Morran

Last week, the Consumer Financial Protection Bureau took a big step toward reining in irresponsible, predatory lenders by taking its first enforcement action against a large payday loan operation accused of robo-signing court documents related to debt-collection lawsuits, illegally overcharging military servicemembers and their families, and trying to cover these actions up by destroying documents before the CFPB could investigate.

 

Robo-Signing; It’s Not Just For Foreclosures

While the term “robo-signing” has mostly been associated with mortgage servicers who hired untrained people to rubber-stamp foreclosure documents without even knowing what the documents were, it also happens in the debt-collection business, where folks have been known to affirm that all the documentation tied to a collections lawsuit is legitimate without having even reviewed it.

And according to CFPB, the debt-collection subsidiary of one of the nation’s largest payday lenders, Cash America, spent the better part of five years preparing, executing, and notarizing documents filed in its Ohio collections litigations without complying with state and court-required signature rules. Specifically, the company was accused of stamping attorney signatures on legal pleadings, military-status affidavits, and consumer account paperwork without prior review.

In total, around 14,000 people ended up paying money as a result of debt collection litigation that may have relied on improper court filings.

 

Overchargiing Those Who Serve

As we’ve written before, just because the Military Lending Act sets interest rates caps on loans to servicemembers and effectively bans the issuing of payday loans to active-duty military personnel doesn’t mean some payday lenders won’t find a way.

And unlike some of the clever tactics taken by other short-term lenders who have figured out loopholes in the MLA, the CFPB says Cash America simply made hundreds of illegal payday loans to servicemembers and their spouses.

COVERING YOUR TRAIL
One way to not get in good with the new regulator on the block: Destroy documents and evidence that might be helpful in that regulator’s examination of your records.

The CFPB says that’s exactly what happened during a routine examination of Cash America in 2012. According to the agency, Cash America’s payday subsidiary Enova not only instructed employees to limit the information they provided to inspectors about the company’s sales and marketing pitches, but also deleted recorded phone calls with consumers, shredded documents and continued to do so even after the CFPB told them to stop, and withheld a report related to the company’s robo-signing practices.

 

The Payday Payback

Cash America will pay out $14 million in refunds to consumers affected by the alleged violations. It has already repaid $6 million of that amount. The remaining $8 million will be given to people who affected by debt-collection lawsuits in Ohio between 2009 to January 2013. If you fall into that category, there is more information available at this link.

On top of the $14 million in refunds, Cash America will pay a $5 million fine for its attempt to destroy evidence and documents.

“This action brings justice to the Cash America customers who were affected by illegal robo-signing, and shows that we will vigilantly protect the consumer rights that servicemembers have earned,” said CFPB Director Richard Cordray in a statement. “We are also sending a clear message today to all companies under our watch that impeding a CFPB exam by destroying documents, withholding records, and instructing employees to mislead examiners is unacceptable.

 

Back to November 2013 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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