A company doing business under the name Cash Store has been ordered to pay a $1.1 million civil money penalty (CMP) and consumer redress of $286,675.64 in a settlement with the Consumer Financial Protection Bureau (CFPB) over alleged violations of three federal consumer protection statutes.
The bureau, in a release, said Cottonwood Financial, Ltd. (called “Cash Store”) is based in Irving, Texas, and owns and operates roughly 340 retail lending outlets in Idaho, Illinois, Michigan, New Mexico, Texas, Utah, and Wisconsin. The CFPB found that in the course of marketing, servicing, and collecting on high-interest payday, auto-title, and unsecured consumer-installment loans Cash Store violated the Consumer Financial Protection Act (CFPA), Fair Credit Reporting Act (FCRA), and Truth in Lending Act (TILA).
Specifically, the CFPB said it found that Cash Store:
- made deceptive representations in its television advertisements and telemarketing calls when promoting “50%-off” all of its loan fees when it did not in fact provide that discount;
- engaged in unfair practices by repeatedly calling consumers’ workplaces and references after being asked to stop and not for purposes of locating consumers, disclosing the delinquency of consumers’ debts to third parties or using tactics that risked such disclosure, and making excessive calls to consumers that aggravated, annoyed, and distressed consumers;
- violated the FCRA by failing to maintain adequate policies and procedures concerning the accuracy and integrity of the information it furnished to consumer reporting agencies, potentially affecting about 20,000 consumer accounts; and
- violated TILA by failing to provide the annual percentage rate to consumers when they inquired over the phone about the cost of their loans.
The redress of $286,675.64 is to go to more than 1,200 borrowers whom Cash Store falsely promised 50% off all fees, the bureau said. The consent order also prohibits Cash Store from certain collection practices and requires it to ensure that its employees respond accurately when asked about loan costs, it said.