The US Consumer Financial Protection Bureau (CFPB) has imposed a monetary penalty of $10m against a payday lender ACE Cash Express, over illegal debt collection tactics.
Accusing the payday lender, the US consumer watchdog said that ACE Cash Express used unfair debt collection practices, such as threatening to sue borrowers, to force them into taking out new loans, thereby trapping payday borrowers into a vicious cycle of debt.
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Terming ACE Cash Express actions as appalling, the CFPB said that ACE debt collectors, both in-house and third-party, falsely threatened to sue or criminally prosecute consumers, report them to credit bureaus, and add fees to their debts.
During the course of investigation, the CFPB found that Texas-based ACE collectors were repeatedly calling consumers’ employers and relatives, and improperly sharing the details of the debt.
"We believe that ACE’s aggressive tactics were part of a culture of coercion aimed at pressuring payday borrowers into debt traps," the US consumer regulator said in a statement.
Consumer Financial Protection Bureau director Richard Cordray said, "This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back."
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By GlobalDataUnder the terms of the settlement, ACE Cash Express has been ordered to pay $5m in refunds to customers and additional $5m fine to the bureau.
