CFPB Takes First Action Against Payday Lender for Robosigning and Military Lending Act Violations

In its first action against a payday lender, the Consumer Financial Protection Bureau (“CFPB”) ordered Cash America International Inc. to pay $19 million for “robo-signing” court documents and overcharging military service members. The CFPB estimates that about 14,000 consumers paid money as a result of debt collection litigation which may have involved reliance on improper court filings. As one of the country’s largest short-term lenders with retail locations across more than 20 states, Cash America is a publicly traded financial services company that provides consumer financial products and services, including payday loans, lines of credit, installment loans, and pawn loans. As a result of the CFPB action, the Fort Worth, Texas-based company will pay up to $14 million in refunds to consumers and it will pay a $5 million civil fine for multiple violations. Cash America said in a statement it neither admitted nor denied the allegations and has already refunded around $6.4 million to customers. The settlement order requires the company to make an additional $8 million in payments to consumers, for a total refund of up to $14 million. The bureau said the payday lender robo-signed court documents in debt collection lawsuits and violated the Military Lending Act by charging active service members and their families an annual interest rate higher than 36 percent.